[10-Q] Zoomcar Holdings, Inc. Quarterly Earnings Report
Zoomcar Holdings, Inc. reported a smaller quarterly net loss and continued liquidity strain in its quarter ended September 30, 2025. Revenue was $2.29 million versus $2.25 million a year ago, while net loss narrowed to $0.79 million from $3.35 million. For the six months, revenue was $4.60 million and net loss was $5.00 million. Operating cash used was $0.53 million for the six months.
The balance sheet shows total assets of $3.12 million against total liabilities of $30.83 million and a stockholders’ deficit of $27.72 million. Cash and cash equivalents were $169,357, and the company disclosed negative working capital of $28.58 million and an accumulated deficit of $338.17 million, stating that these conditions raise substantial doubt about its ability to continue as a going concern. Management noted plans to seek additional debt or equity financing, including a previously filed Form S-1 for up to $15 million with no proceeds raised to date, and discussions for up to $5 million in bridge financing and approximately $20 million in an uplist raise. As of November 12, 2025, 6,902,727 common shares were outstanding.
- None.
- Going concern: substantial doubt disclosed due to low cash, negative working capital of $28.58M, and cumulative deficit of $338.17M.
- Balance sheet stress: stockholders’ deficit of $27.72M and liabilities of $30.83M against $3.12M in assets.
Insights
Going concern risk persists amid low cash and large deficits.
Zoomcar posted modest revenue growth with a quarterly net loss of
The company explicitly states substantial doubt about continuing as a going concern. It references a Form S-1 to raise up to
Key items to track include subsequent financing agreements, cash balance trends, and any updates to liabilities. The filing also notes defaults on certain lease payments and related penal interest, underscoring near-term cash pressure.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ | Large accelerated filer | ☐ | Accelerated filer |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of November 12, 2025,
ZOOMCAR HOLDINGS, INC.
Quarterly Report on Form 10-Q
Table of Contents
| Page | |||
| PART I. FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | 1 | |
| Unaudited Condensed Consolidated Balance Sheets at September 30, 2025 and March 31, 2025. | 1 | ||
| Unaudited Condensed Consolidated Statements of Operations for six months ended September 30, 2025 and 2024 | 2 | ||
| Unaudited Condensed Consolidated Statements of Comprehensive Income / (Loss) for the six months ended September 30, 2025 and 2024. | 3 | ||
| Unaudited Condensed Consolidated Statements of Stockholders’ Deficit for the six months ended September 30, 2025 and 2024. | 4 | ||
| Unaudited Condensed Statement of Cash Flows for the six months ended September 30, 2025 and 2024. | 5 | ||
| Notes to Unaudited Condensed Consolidated Financial Statements | 6 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 53 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 72 | |
| Item 4. | Controls and Procedures | 72 | |
| PART II. OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 75 | |
| Item 1A. | Risk Factors | 78 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 118 | |
| Item 3. | Defaults Upon Senior Securities | 119 | |
| Item 4. | Mine Safety Disclosures | 119 | |
| Item 5. | Other Information | 119 | |
| Item 6. | Exhibits | 119 | |
| SIGNATURES | 120 | ||
i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain certain statements that may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. This includes, without limitation, statements regarding expectations, hopes, beliefs, intentions, plans, prospects, financial results or strategies regarding us and the future held by our management team and the products and markets, future financial condition, expected future performance and market opportunities of our business. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Form 10-Q, forward-looking statements may be identified by the use of words such as “estimate,” “continue,” “could,” “may,” “might,” “possible,” “predict,” “should,” “would,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target,” “designed to” or other similar expressions that predict or indicate future events or trends or that are not statements of historical facts. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
We caution readers of this Quarterly Report on Form 10-Q that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, which could cause the actual results to differ materially from the expected results. The following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements contained in this Quarterly Report on Form 10-Q:
| ● | our ability to maintain the quotation of our common stock on the OTCQB; |
| ● | our ability to execute our anticipated business plans and strategy, or continue as a going concern, particularly in light of our current liquidity and capital resources; |
| ● | our ability to obtain additional capital, which will be necessary to continue our business and operations; |
| ● | our limited operating history under our current business model and history of net losses; |
| ● | our reliance on key technology providers and payment processors facilitating payments to and by our customers; |
| ● | unfavorable interpretations of laws or regulations or changes in applicable laws or regulations; |
| ● | the possibility that we may be adversely affected by other economic, political, business, regulatory, and/or competitive factors; |
| ● | our estimates of future bookings, revenues and capital requirements; |
| ● | the evolution of the markets in which we compete; |
| ● | political instability associated with operating in current and future emerging markets we have entered or may later enter; |
| ● | risks associated with our ability to obtain and maintain adequate insurance to cover risks associated with business operations now or in the future; |
ii
| ● | our ability to adhere to legal requirements with respect to the protection of personal data and privacy laws; |
| ● | cybersecurity risks, data loss and other breaches of our network security and the disclosure of personal information or the infringement upon our intellectual property by unauthorized third parties; |
| ● | risks associated with the performance or reliability of infrastructure upon which we rely, including, but not limited to, internet and cellular phone services; |
| ● | the risk of regulatory or other lawsuits or proceedings relating to our platform or the peer-to-peer car sharing we facilitate; |
| ● | increased compliance risks associated with operating in multiple foreign jurisdictions at once, including regulatory and accounting compliance issues; |
| ● | our ability to manage the risks associated with current defaults of our outstanding indebtedness and other payment obligations to third-parties and breaches or potential breaches of our contractual and other outstanding obligations; and |
| ● | other risks and uncertainties described in this Quarterly Report on Form 10-Q, including those under the section entitled “Risk Factors,” as well as risk factors and in our Annual Report on Form 10-K for the fiscal year ended March 31, 2025, which was filed with the Securities and Exchange Commission on June 30, 2024 |
If any of these risks materialize or any of our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that we presently do not know or that we currently believe are immaterial that could also cause actual results to differ materially from those contained in the forward-looking statements. In addition, forward-looking statements reflect our expectations, plans or forecasts of future events and views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments may cause our assessments to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our assessments as of any date subsequent to the date of this Quarterly Report on Form 10-Q. Accordingly, undue reliance should not be placed upon the forward-looking statements. Actual results, performance or achievements may, and are likely to, differ materially, and potentially adversely, from any projections and forward-looking statements and the assumptions on which those forward-looking statements were based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as projected financial information and other information are based on estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control. Forward-looking statements are not guarantees of performance. All forward-looking statements attributable to us or a person acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward- looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
iii
FREQUENTLY USED TERMS
Unless otherwise stated in this quarterly report or the context otherwise requires, references to:
“ACM” means ACM Zoomcar Convert LLC.
“Board” means the board of directors of the Company. References herein to the Company will include its subsidiaries to the extent reasonably applicable.
“Business Combination” and “Reverse Recapitalization” means the business combination of the IOAC and Zoomcar pursuant to the terms of the Merger Agreement and the other transactions contemplated by the Merger Agreement.
“Bylaws” means the Amended and Restated Bylaws of the Company as in effect on the date of its prospectus.
“Charter” means the Amended and Restated Certificate of Incorporation of the Company as in effect on the date of its prospectus.
“Closing” means the closing of the Business Combination.
“Closing Date” means December 28, 2023.
“Common Stock” means the shares of Common Stock, par value $0.0001 per share, of the Company.
“Company”, “we”, “us“, “our” and “Zoomcar” means Zoomcar Holdings, Inc., a Delaware corporation, and its consolidated subsidiaries following the Closing
“Incentive Plan” means the Zoomcar Holdings, Inc. 2023 Equity Incentive Plan.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“GAAP” means generally accepted accounting principles in the United States.
“IOAC” means the Company prior to the Closing.
“Merger” means the merger of Merger Sub with and into Zoomcar, with Zoomcar continuing as the surviving corporation and as a wholly owned subsidiary of the Company, in accordance with the terms of the Merger Agreement.
“Merger Agreement” means the Agreement and Plan of Merger and Reorganization, dated as of October 13, 2022, as amended by the Post-Closing Amendment, by and among IOAC, Zoomcar, Merger Sub and the Seller Representative.
“Merger Sub” means Innovative International Merger Sub, Inc.
“Nasdaq” means The Nasdaq Stock Market LLC.
“Ordinary Shares” means the Class A Ordinary Shares and Class B Ordinary Shares.
“OTCQX” means the OTCQX Best Market of the OTC Markets Group.
“OTCQB Market” or “OTCQB” is the OTCQB Venture Market for companies to provide information to investors. It is not a registered stock exchange.
“OTC Markets Group” shall mean OTC Markets Group Inc., a corporation organized under the laws of the State of Delaware, located at 300 Vesey Street, 12th Floor, New York, NY 10282. OTC Markets Group is not a securities regulator or self-regulatory organization.
“OTCQX Rules” shall mean the rules and standards outlined herein applicable to U.S. companies seeking qualification of their securities for trading on the OTCQX Market.
“OTCQB Rules” shall mean the rules and standards outlined herein applicable to U.S. companies seeking qualification of their securities for trading on the OTCQB Market.
“Post-Closing Amendment” means the amendment to the Merger Agreement, dated as of December 29, 2023.
“Public Warrants” means one (1) whole redeemable warrant that was included in as part of each Unit, entitling the holder thereof to purchase one (1) share of Common Stock after the Business Combination at a purchase price of $5.71 per share.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Sponsor” means Innovative International Sponsor I LLC, a Delaware limited liability company.
“Zoomcar Common Stock” means, collectively, the shares of Common Stock, par value $0.0001 per share, of Zoomcar Holdings, Inc..
“Zoomcar, Inc.” means Zoomcar, Inc., a Delaware corporation. References herein to Zoomcar will include its subsidiaries to the extent reasonably applicable.
“Zoomcar India” means Zoomcar India Private Limited, an Indian limited liability company and subsidiary of Zoomcar.
“Zoomcar Stockholders” means security holders of Zoomcar prior to the Closing, including holders of outstanding shares of Zoomcar India.
iv
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ZOOMCAR HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in USD, except number of shares)
| As at | September 30, 2025 | March 31, 2025 | ||||||
| Assets | ||||||||
| Current assets : | ||||||||
| Cash and cash equivalents (Refer Note 27- VIE) | $ | $ | ||||||
| Accounts receivable, net of allowance for credit losses | ||||||||
| Assets held for sale | ||||||||
| Prepaid expenses | ||||||||
| Balances with government authorities | ||||||||
| Other current assets (Refer Note 27- VIE) | ||||||||
| Total current assets | $ | $ | ||||||
| Property and equipment, net of accumulated depreciation $ | ||||||||
| Operating lease right-of-use assets | ||||||||
| Intangible assets, net of accumulated amortisation of $ | ||||||||
| Long term investments (Refer Note 27- VIE) | ||||||||
| Prepaid expenses | ||||||||
| Other non-current assets, net of allowance for credit losses | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ deficit | ||||||||
| Current liabilities : | ||||||||
| Accounts payable (Refer Note 27- VIE) | $ | $ | ||||||
| Accounts payable towards related parties | ||||||||
| Current maturities of long-term debt | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Finance lease liabilities | ||||||||
| Contract liabilities | ||||||||
| Current portion of pension and other employee obligations (Refer Note 27- VIE) | ||||||||
| Unsecured notes | ||||||||
| Convertible Redeemable note | ||||||||
| Unsecured convertible note | ||||||||
| Other current liabilities (Refer Note 27- VIE) | ||||||||
| Total current liabilities | $ | $ | ||||||
| Operating lease liabilities, less current portion | ||||||||
| Pension and other employee obligations, less current portion | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies (Note 29) | ||||||||
| Stockholders’ deficit: | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders’ deficit | $ | ( | ) | $ | ( | ) | ||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these Condensed Consolidated Balance Sheets.
1
ZOOMCAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In USD, except number of shares)
| Three months ended September, | Six months ended September, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue : | ||||||||||||||||
| Revenues from services | $ | $ | $ | $ | ||||||||||||
| Other revenues | ||||||||||||||||
| Total revenue | $ | $ | $ | $ | ||||||||||||
| Cost and Expenses | ||||||||||||||||
| Cost of revenue | ||||||||||||||||
| Technology and development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total costs and expenses | $ | $ | $ | $ | ||||||||||||
| Loss from operations before income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Finance costs | ||||||||||||||||
| Gain on troubled debt restructuring | ( | ) | ( | ) | ( | ) | ||||||||||
| Other expense/(income), net | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Provision for income taxes | ||||||||||||||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share * | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares used in computing loss per share: * | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| * |
The accompanying notes are an integral part of these Condensed Consolidated Statements of Operations.
(This space has been left intentionally blank)
2
ZOOMCAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(In USD, except number of shares)
| Three months ended September, | Six months ended September, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net loss | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Other comprehensive income/(loss), net of tax: | ||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||
| Gain/ (Loss) for defined benefit plan | ( | ) | ( | ) | ||||||||||||
| Reclassification adjustments: | ||||||||||||||||
| Amortization of gains on defined benefit plan | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss attributable to common stockholders | $ | $ | $ | ( | ) | |||||||||||
| Comprehensive loss | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
The accompanying notes are an integral part of these Condensed Consolidated Statements of Comprehensive Loss
(This space has been left intentionally blank)
3
ZOOMCAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2025 AND 2024
(In USD, except number of shares)
| Zoomcar Holdings, Inc. | ||||||||||||||||||||||||||||
| Shares pending issuance Amounts | Shares | Amounts | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income/(loss) | Total equity (deficit) | ||||||||||||||||||||||
| Balance as at April 01, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Retroactive application of First Reverse Stock Split ** | ( | ) | ( | ) | ||||||||||||||||||||||||
| Retroactive application of Second Reverse Stock Split ** | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance as at April 01, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||
| Issue of common stock against Atalaya note | - | |||||||||||||||||||||||||||
| Issue of common stock warrants along with redeemable promissory notes - | - | - | ||||||||||||||||||||||||||
| Issue of common stock warrants to placement agents | - | - | ||||||||||||||||||||||||||
| Gain on employee benefit, (net of taxes amounts to $) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| - | - | |||||||||||||||||||||||||||
| Balance as at June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares pending issuance on conversion of Unsecured promissory note | - | |||||||||||||||||||||||||||
| Gain on employee benefit, (net of taxes amounts to $) | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment, (net of taxes amounts to $) | - | - | ||||||||||||||||||||||||||
| Balance as at September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance as at April 01, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issue of common stock* | ( | ) | ||||||||||||||||||||||||||
| Issue of prefunded warrants in exchange of common stock* | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issue of prefunded warrants * | ||||||||||||||||||||||||||||
| Warrants pending issuance in lieu of placement agent fees | - | - | ||||||||||||||||||||||||||
| Gain on employee benefit, (net of taxes amounts to $) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment, (net of taxes amounts to $) | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance as at June 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issue of common stock* | ( | ) | ||||||||||||||||||||||||||
| Shares issued under employee stock plans | - | |||||||||||||||||||||||||||
| Stock based compensation*** | ||||||||||||||||||||||||||||
| Gain on employee benefit, (net of taxes amounts to $) | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Translation adjustment on derecognition of subsidiary | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment, (net of taxes amounts to $) | - | - | ||||||||||||||||||||||||||
| Balance as at September 30, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
| * |
| ** |
| *** |
The accompanying notes are an integral part of these Condensed Consolidated Statements of Stockholders’ Deficit
4
ZOOMCAR HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| September 30, 2025 | September 30, 2024 | |||||||
| (unaudited) | ||||||||
| A. Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities : | ||||||||
| Depreciation and amortization | ||||||||
| Interest on redeemable promissory note | ||||||||
| Interest on unsecured loans | ||||||||
| Interest on Convertible note | ||||||||
| Interest on finance leases | ||||||||
| Change in fair value of Unsecured Convertible Note | ( | ) | ||||||
| Other borrowing cost | ||||||||
| Gain on sale and disposal of assets, net | ( | ) | ||||||
| Gain on sale and disposal of assets held for sale, net | ( | ) | ( | ) | ||||
| Gain on derecognition of subsidiary | ( | ) | ||||||
| Stock based compensation | ||||||||
| Assets written off | ||||||||
| Liabilities written off | ( | ) | ||||||
| Payable to customers and provision written back | ( | ) | ( | ) | ||||
| Liquidated damages | ||||||||
| Gain on troubled debt restructuring | ( | ) | ( | ) | ||||
| Impairment on assets held for sale | ||||||||
| Host receivable written off | ||||||||
| Unrealized foreign currency exchange loss, net | ||||||||
| $ | ( | ) | $ | ( | ) | |||
| Changes in operating assets and liabilities : | ||||||||
| Decrease in accounts receivable | ||||||||
| Decrease in balances with government authorities | ||||||||
| Decrease in prepaid expenses | ||||||||
| (Increase)/Decrease in other assets | ( | ) | ||||||
| Increase in accounts payables | ||||||||
| (Decrease)/Increase in other liabilities | ( | ) | ||||||
| Increase/(Decrease) in pension and other employee obligations | ( | ) | ||||||
| Decrease in operating lease right of use asset | ||||||||
| (Decrease) in operating lease liabilities | ( | ) | ( | ) | ||||
| Increase/(Decrease) in contract liabilities | ( | ) | ||||||
| Net cash used in operating activities (A) | $ | ( | ) | $ | ( | ) | ||
| B. Cash flows from investing activities | ||||||||
| Payment for purchase of property and equipment, including intangible assets and capital advances | ( | ) | ||||||
| Proceeds from sale of property and equipment | ||||||||
| Proceeds from sale of asset held for sale | ||||||||
| (Investments in) / proceeds from fixed deposits | ( | ) | ||||||
| Net cash (used in)/generated from investing activities (B) | $ | ( | ) | $ | ||||
| C. Cash flows from financing activities | ||||||||
| Proceeds from issue of redeemable promissory notes | ||||||||
| Payment of redeemable promissory note issue expenses | ( | ) | ||||||
| Proceeds from Unsecured notes | ||||||||
| Payment of Unsecured notes issuance cost | ( | ) | ||||||
| Repayment of Unsecured notes | ( | ) | ||||||
| Proceeds from Convertible notes | ||||||||
| Payment of Convertible notes issuance cost | ( | ) | ||||||
| Principal repayment of debt | ( | ) | ( | ) | ||||
| Principal payment of finance lease obligation | ( | ) | ||||||
| Net cash generated from financing activities (C) | $ | $ | ||||||
| Net increase in cash and cash equivalents and restricted cash (A+B+C) | ( | ) | ( | ) | ||||
| Effect of foreign exchange on cash and cash equivalents. | ( | ) | ( | ) | ||||
| Cash and cash equivalents and restricted cash | ||||||||
| Cash and cash equivalents at the beginning of period | ||||||||
| Restricted cash included under other non-current assets at the beginning of period | ||||||||
| Cash and cash equivalents derecognized due to derecognition of subsidiary | ( | ) | ||||||
| End of period | $ | $ | ||||||
| Reconciliation of cash, cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets | ||||||||
| Cash and cash equivalents | ||||||||
| Total cash and cash equivalents and restricted cash shown in Condensed Consolidated Statement of Cash Flows | $ | $ | ||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash refund for income taxes | ||||||||
| Interest paid on debt | ( | ) | ( | ) | ||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Issue of Common stock upon conversion of unsecured convertible Note | ||||||||
| Issue of warrants to redeemable promissory note holders | ||||||||
| Conversion of unsecured promissory note into equity (shares pending issuance) | ||||||||
| Warrants issued to placement agents | ||||||||
| Gain on troubled debt restructuring with the lenders | ||||||||
| Issue of common stock upon exercise of warrants | ||||||||
| Issue of prefunded warrants in exchange of common stock | ||||||||
| Issue of prefunded warrants in lieu of liquidated damages payable | ||||||||
| Warrants pending issuance in lieu of placement agent fees | ||||||||
The accompanying notes are an integral part of these Condensed Consolidated Statements of Cash Flows
5
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 1. | Organization, Business operation and Going concern |
Zoomcar Holdings, Inc. (formerly “Innovative International Acquisition Corp”) a Delaware corporation provides mobility solutions to consumers and businesses. The accompanying Condensed Consolidated Financial Statements include the accounts and transactions of Zoomcar Holdings, Inc. and its subsidiaries (collectively, the “Company” or “the combined entity” or “Zoomcar”). The Company operates its facilitation services under the Zoomcar brand with its operations in India.
Going concern
The accompanying Condensed Consolidated
Financial Statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC. The Condensed Consolidated
Financial Statements have been prepared using U.S. GAAP applicable to a going concern that contemplates the realization of assets and
settlement of liabilities in the normal course of business. The Company incurred a net loss of $
The Company expects to continue to incur net losses and have significant cash outflows from operating activities for at least the next 12 months. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date of the Condensed Consolidated Financial Statements are issued.
Management is evaluating plans with
respect to these adverse financial conditions that caused to express substantial doubt about the Company’s ability to continue as
a going concern. Management’s plan is to seek funding through additional debt or equity financing arrangements, implement business
initiatives to improve customer experience and incremental expense reduction measures or a combination thereof to continue financing its
operations. The Company has filed Registration Statement under Form S-1 on May 5, 2025 to raise up to $
| ● | On July 31, 2025 , the Company entered into Securities Purchase Agreements with certain institutional
accredited investors pursuant to which the Company issued Bridge notes for a total principal amount of $ |
| ● | On August 19, 2025, the Company closed a Securities Purchase Agreement with Labrys Fund II, L.P. (“Labrys”)
in connection for purchase of a promissory note convertible on default. Labrys purchased a note for a principal amount $ |
6
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 1. | Organization, Business operation and Going concern (Continued) |
| ● | On August 24, 2025, the Company closed a Securities Purchase
Agreement with AES Capital Management, LLC (“AES”) in connection with purchase of convertible redeemable notes. AES purchased
for an aggregate principal amount of $ |
| ● | On August 24, 2025, the Company closed a Securities Purchase
Agreement with CFI CAPITAL LLC (“CFI”) in connection with purchase of convertible redeemable notes. CFI purchased a convertible
for a principal amount of $ |
While these financing arrangements shall result in the payment of certain outstanding indebtedness, the Company will still need to raise additional capital imminently in order to have sufficient capital. There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital or secure the additional financing necessary to implement its current operating plan.
The ability of the Company to continue as a going concern is dependent upon its ability to increase its revenues and eventually achieve profitable operations. The accompanying Condensed Consolidated Financial Statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
| 2. | Summary of Significant Accounting Policies |
| i. | Basis of presentation |
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by US GAAP have been condensed or omitted. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and an Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The results of operations for the three and six months ended September 30, 2025, are not necessarily indicative of the results for the fiscal year ending March 31, 2026, or any future interim period.
7
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
These Condensed Consolidated Financial Statements follow the same significant accounting policies as those included in the audited Consolidated Financial Statements of the Company for the year ended March 31, 2025. In the opinion of management, these Condensed Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Condensed Consolidated Financial position, results of operations, and cash flows for these interim periods.
The Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries and variable interest entities in which the Company is the primary beneficiary, including an entity in India and in other geographical locations. All intercompany accounts and transactions have been eliminated in the Condensed Consolidated Financial Statements herein.
| ii. | Principles of consolidation |
The Condensed Consolidated Financial Statements include the accounts of Zoomcar Holdings, Inc. and of its wholly owned subsidiaries and Variable Interest Entities (“VIE”) in which the Company is the primary beneficiary, including an entity in India and in other geographical locations (collectively, the “Company”).
The Company determines, at the inception of each arrangement, whether an entity in which it has made an investment or in which it has other variable interest is considered a VIE in accordance with ASC 810.
Periodically, the Company determines whether any changes in its interest or relationship with the entity impact the determination of whether the entity is still a VIE and, if so, whether the Company is the primary beneficiary.
As at September 30, 2025, following are the list of subsidiaries and step-down subsidiaries:
| Name of Entity | Place of Incorporation | Investor Entity | Method of consolidation | |||
| Zoomcar, Inc. | ||||||
| Zoomcar India Private Limited | ||||||
| Zoomcar Netherlands Holding B. V | ||||||
| Fleet Holding Pte ltd | ||||||
| PT Zoomcar Indonesia Mobility Service | ||||||
| Fleet Mobility Philippines Corporation |
The assets/liabilities consolidated for the VIE are not material. Refer note 27 for details.
8
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
| iii. | Use of estimates and assumptions |
The use of estimates and assumptions as determined by management is required in the preparation of Condensed Consolidated Financial Statements in conformity with US GAAP. These estimates are based on management’s evaluation of historical trends and other information available when the Condensed Consolidated Financial Statements are prepared and may affect the amounts reported and related disclosures. Actual results could differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
The significant estimates, judgments and assumptions that affect the Condensed Consolidated Financial Statements include, but are not limited to; are:
| a. | Estimation of defined benefit obligation |
| b. | Fair value measurement of financial instruments |
| c. | Estimation of utilization of loyalty points |
| d. | Leases – assumption to determine the incremental borrowing rate |
| e. | Valuation allowance on deferred tax assets |
| f. | Estimation of utilization of balances with government authorities |
| g. | Fair value measurement of share-based payments |
Changes in accounting estimates are accounted for in the period of change and for prospective periods, if applicable. A change to an accounting estimate is recorded based on events, facts, or circumstances that occurred during the period in which the estimate was changed.
9
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
| iv. | Currency translation |
The Condensed Consolidated Financial Statements are presented in US Dollars (“$”) which is the reporting currency of the Company.
Monetary assets and liabilities, and transactions denominated in currencies other than the functional currency are remeasured at the exchange rate on the Balance Sheet date and non- monetary assets and liabilities are measured at historical exchange rates. The gains and losses resulting from remeasurement are recorded as foreign exchange gains (losses), within other income (expense), in the Condensed Consolidated Statement of Operations.
The functional currency of the Company’s foreign subsidiaries is either the local currency or U.S. dollar depending on the nature of the subsidiaries’ activities. The Company determines the functional currency for each of its foreign subsidiaries by reviewing their operations and currencies used in their primary economic environments.
Assets and liabilities of the subsidiaries with functional currency other than U.S. Dollar are translated into U.S. Dollar at the rate of exchange existing at the Balance Sheet date. Retained earnings and other equity items are translated at historical rates, revenues and expenses are translated at average exchange rates during the year. Foreign currency translation adjustments are recorded within accumulated other comprehensive income, a separate component of total equity (deficit).
| v. | Comprehensive Income (Loss) |
Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss), net of tax. Other comprehensive income (loss), net of tax, refers to revenue, expenses, gains, and losses that under generally accepted accounting principles are recorded as an element of members’ equity but are excluded from net income (loss). The Company’s other comprehensive income (loss), net of tax, consists of foreign currency translation adjustments that result from consolidation of its foreign entities and actuarial gain/ (loss) on defined benefit obligations.
| vi. | Revenue recognition |
During the six months ended September 30, 2025 and September 30, 2024, the Company derives its revenue principally from the following:
Facilitation revenue
Zoomcar Host Services is a marketplace feature of the platform that helps owners of vehicles (“Hosts/ Customer/Lessors”) connect with users (“Renters/Lessee”) in temporary need of a vehicle on leasehold basis for their personal use.
10
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
Facilitation Services revenue consists of facilitation fees charged to Hosts, net of incentives and refunds and trip protection charged to the Renters. The Company’s primary performance obligation in the transaction towards the Host is to facilitate the successful completion of the rental transaction and towards the renter is to offer trip protection.
Customer support is rendered to both the Host (customer/lessor) and the renter (lessee). Company being the intermediary between the two provides its platform through which all communication takes place related to any services e.g., extension of trip period. Such services also include the normal customer support related to any vehicle breakdowns, tracking of vehicles, renter background checks, vehicle ownership checks and various other activities which are part of an ongoing set of series required for successful listing, renting and completion of trip. These activities are not distinct from each other and are not separate performance obligations. As a result, these series of services integrate together to form a single performance obligation.
In case of booking value collected from the renter on behalf of the Host, the Company evaluated the presentation of revenue on a gross versus net basis based on factors given under ASC 606 whether or not it is the principal (gross) or the agent (net) in the transaction and concluded that it is acting in an agent capacity, and revenue is presented net reflecting the facilitation fees received from the Marketplace service. The customer simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs. Revenue is recognized ratably over the trip period on straight line basis using the output method as its performance obligation is satisfied over time.
The Company offers various incentive programs to hosts. The incentives are recorded in accordance with ASC 606- 10-32-25 and ASC 606-10-32-27 as a reduction to revenue and in cases where the amount of incentive paid to the Host are above the facilitation fees earned from that Host on cumulative basis, the excess of the revenue amount is recorded as a marketing expense in the Condensed Consolidated Statements of Operations. These incentives are offered as part of overall marketing strategy of the Company and incentivize the hosts to refer the platform.
Loyalty program
The Company offers loyalty program, Z-Points, wherein customers are eligible to earn loyalty points that are redeemable for payment towards facilitation fees. Under ASC 606, each transaction that generates loyalty points results in the deferral of revenue equivalent to the retail value at the date the points are earned. The associated revenue is recognized when the customer redeems the loyalty points. The retail value of points is estimated based on the current retail value measured as of the date the loyalty points are earned, less an estimated amount representing loyalty points that are not expected to be redeemed (“breakage”). Breakage is reviewed on an annual basis and includes significant assumptions such as historical breakage trends, internal Company forecasts and extended redemption period, if any.
11
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
Vouchers
During the six months ended September 30, 2025, the Company sold vouchers of certain redemption value that are utilized for payment towards facilitation fees. Vouchers may be sold for less than their redemption value and in such cases, the transaction price is limited to the amount received, unless additional consideration is expected. The sale of such vouchers results in the deferral of revenue equivalent to the amount received on the date of sale. The associated revenue is recognized when the customer utilizes such voucher. On expiry of validity of the voucher, the unutilized portion is recognized as Other operating revenues in the Condensed Consolidated Statements of Operations.
Contract liabilities
Contract liabilities primarily consist of obligations to customers for advance received against bookings, revenue-share payable to customers for vehicles listed by them on Company’s portal for short-term rentals and related to Company’s points-based loyalty program. As per ASC 606- 10-50-14 the Company does not aggregate amount of transaction price allocated to remaining performance obligations as required under ASC 606-10-50-13, since the company’s performance obligation is a part of a contract that has an original expected duration of one year or less.
| vii. | Cash and cash equivalents |
Cash and cash equivalents include cash on hand, bank balances. Cash and cash equivalents are recorded at cost, which approximates fair value.
Cash and cash equivalents include amounts collected on behalf of but not yet remitted to the Hosts which are included in accrued and other current liabilities in the Condensed Consolidated Financial Statements.
| viii. | Restricted Cash |
The Company is required to place cash in an indemnification escrow fund with the placement agent for all indemnification liabilities and expenses payable by the Company as per the placement agent agreement for a period of 3 years from closing of the November 2024 Offering. Such cash is classified as restricted cash and reported as a component of other non-current assets in the Condensed Consolidated Balance Sheets.
| ix. | Accounts receivable, net of allowance |
Accounts receivables are stated net of allowances and primarily represent corporate debtors and dues from payment gateways for amounts paid by customers. In case of corporate debtors, the payment terms generally include a credit of 30-60 days. The amounts receivable from payment gateways are settled within 2 days.
12
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
The Company records an allowance for credit losses for amounts owed for completed transactions that may never settle or be collected. The Company estimates its exposure to balances deemed to be uncollectible based on factors including known facts and circumstances, historical experience, and the age of the uncollected balances. Accounts receivable balances are written off against the allowance of credit losses after all means of collection has been exhausted and potential recovery is considered remote.
| x. | Other receivables |
Other receivables include amounts recoverable from host. The receivable from host is adjusted for an allowance on account of host which are not active on the platform for more than 90 days.
| xi. | Balances with government authorities – Input Tax Credit |
Balances with government authorities represent the tax credit with government agencies which are recognized when the Company has performed the required services and when they meet the eligibility criteria outlined in the applicable government regulations.
The input tax credits are related to Indian Goods and Service Tax (“GST”). These balances are classified based on their expected period of utilization of future GST credit and GST debit that comes from domestic purchases and sales of services, respectively. If the tax credits are expected to be utilized within twelve months from the reporting date, they are classified as current assets. If the tax credits are not expected to be utilized within twelve months from the reporting date, they are classified as non-current assets.
| xii. | Concentration of credit risk |
Cash and cash equivalents, investments, other receivables, and accounts receivable are potentially subject to credit risk concentration. The Company has not experienced any material losses related to these concentrations during the years presented. No customers accounted for 10% or more of revenue for the six months ended September 30, 2025 and September 30, 2024.
| xiii. | Property and equipment, net |
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives.
The devices installed on host vehicles
in the marketplace business have been depreciated over
When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the Condensed Consolidated Balance Sheets and any resulting gain or loss is reflected on the Condensed Consolidated Statements of Operations in the period realized.
13
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
| xiv. | Assets held for sale |
The Company classifies vehicles to be disposed of as held for sale in the period in which they are available for immediate sale in their present condition and the sale is probable and expected to be completed within one year. The Company initially measures assets held for sale at the lower of their carrying value or fair value less costs to sell and assesses their fair value annually until disposed. The fair value of Assets held for sale not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an asset are observable, the Valuation is included in Level 2.
In case of certain vehicles which are not sold within one year from date of classification, the Company reassess the carrying value of the assets to adjust it for the realizable value.
| xv. | Impairment |
Long-lived assets such as property and equipment, right-of-use assets and intangible assets that are held and used by the Company are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company monitors the long-lived assets for impairment indicators on an on-going basis. If impairment indicators exist, the Company determines the recoverability of the asset by comparing the undiscounted cash flows expected to be generated from the use and eventual disposition the long-lived asset groups to the related net book values. If the net book value of the asset group exceeds the undiscounted cash flows, an impairment loss is recognized as the difference between the carrying value of the asset and its estimated fair value.
The Company estimate cash flows and fair value using internal budgets based on recent sales data and economic uncertainties. The key factors that affect estimates are (1) future revenue estimates; (2) customer preferences and decisions; and (3) product pricing. Any differences in actual results from the estimates could result in fair values different from the estimated fair values, which could materially affect our future results of operations and financial condition. The Company believes the projections of anticipated future cash flows and fair value assumptions are reasonable; however, changes in assumptions underlying these estimates could affect its valuations.
| xvi. | Leases |
The Company determines if an arrangement is a lease at inception of the contract. The Company’s assessment is based on whether: (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term of the contract, and (3) the Company has the right to direct the use of the asset. A lease is classified as a finance lease if any one of the following criteria are met: (1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset or (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset.
14
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
Operating leases are presented within “Operating lease right-of-use assets,” “Current portion of operating lease liabilities” and “Operating lease liabilities, less current portion” in the Company’s Condensed Consolidated Balance Sheets. The current portion of finance lease liabilities are presented within “Finance lease liabilities” in the Company’s Condensed Consolidated Balance Sheets.
ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease arrangement. Lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease ROU assets are recognized at commencement date in an amount equal to lease liability, adjusted for any lease prepayments, initial direct costs, and lease incentives. For leases in which the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date. Lease terms includes the effects of options to extend or terminate the lease when it is reasonably certain at commencement of the lease that the Company will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term reflecting single operating lease cost. The Company evaluates lease agreements to determine lease and non- lease components, which are accounted for separately.
Lease payments that depend on factors other than an index or rate are considered variable lease payments and are excluded from the operating lease assets and liabilities and are recognized as expense in the period in which the obligation is incurred. The Company accounts for lease-related concessions in accordance with guidance in Topic 842, Leases, to determine, on a lease-by-lease basis, whether the concession provided by lessor should be accounted for as a lease modification.
The Company accounts for a modification as a separate contract when it grants an additional right of use not included in the original lease and the increase is commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract. Modifications which are not accounted for as a separate contract are reassessed as of the effective date of the modification based on its modified terms and conditions and the facts and circumstances as of that date. Upon modification, the Company remeasures the lease liability to reflect changes to the remaining lease payments and discount rates and recognizes the amount of the remeasurement of the lease liability as an adjustment to the ROU assets. However, if the carrying amount of the ROU assets is reduced to zero as a result of modification, any remaining amount of the remeasurement is recognized as an expense in condensed consolidated statements of income.
The Company reviews ROU assets for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.
15
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
| xvii. | Expenses |
Cost of revenue
Cost of revenue expenses primarily consist of personnel-related compensation costs of local operations teams and teams who provide phone, email and chat support to users, repairs and maintenance expenses of vehicles, vehicle site rentals, devices depreciation, power, software support charges, payment gateway charges and other direct expenses.
Technology and development
Technology and development expenses primarily consist of personnel-related compensation costs and information technology and data science expenses. Technology and development costs are expensed as incurred.
Sales and marketing
Sales and marketing expenses primarily consist of personnel-related compensation costs, advertising expenses and marketing partnerships with third parties. Sales and marketing costs are expensed as incurred.
General and administrative
General and administrative expenses primarily consist of personnel-related compensation costs, professional services fees, administrative fees, depreciation, facility costs, and other corporate costs. General and administrative expenses are expensed as incurred.
| xviii. | Finance costs |
Finance costs comprises interest cost on debt, transaction costs, fair value changes in financial instruments, SSCPN issue expenses, and interest expense on lease liabilities. Borrowing costs and interest on leases are recognized in the Condensed Consolidated Statements of Operations using the effective interest method.
| xix. | Employee benefits |
Defined benefit plan
Employees in India are entitled to a defined benefit retirement plan covering eligible employees of the Company. The plan provides for a lump-sum payment to eligible employees, at retirement, death, and incapacitation or on termination of employment, of an amount based on the respective employees’ salary and tenure of employment. The Company’s benefit plan is unfunded.
16
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
Management makes certain assumptions relating to discount rates, salary growth, retirement rates, mortality rates and other factors when calculating annual amounts to be recognized. These assumptions are reviewed annually by management, assisted by the enrolled actuary, and updated as warranted.
Amortization
of a net gain or loss included in accumulated other comprehensive income shall be included as a component of net pension cost for a year
if, as of the beginning of the year, that net gain or loss exceeds
Compensated absences
The Company’s liability for compensated absences is determined based on an actuarial valuation using the projected unit credit method and is charged to Condensed Consolidated Statements of Operations in the year in which they accrue.
Defined contribution plan
Eligible employees of the Company in India participate in a defined contribution fund in accordance with the regulatory requirements in the Indian jurisdiction. Both the employee and the Company contribute an equal amount to the fund which is equal to a specified percentage of the employee’s salary.
The Company has no further obligation under defined contribution plans beyond the contributions made under these plans. Contributions are charged to profit or loss and are included in the Condensed Consolidated Statements of Operations in the year and/or period in which they accrue.
| xx. | Stock-based compensation |
The Company accounts for stock-based compensation expense in accordance with the fair value recognition and measurement provisions of US GAAP, which requires compensation cost for grant-date fair value of stock-based awards to be recognized over the requisite service period. The Company includes a forfeiture estimate in the amount of compensation expense being recognized based on the Company’s estimate of equity instruments that will eventually vest. The fair value of stock-based awards, granted or modified, is determined on the grant date at fair value, using appropriate valuation techniques. For the options that vest in a graded vesting manner over the vesting period, the Company has adopted the graded vesting approach for recognition of compensation cost over the vesting period.
17
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
For
stock options or restricted stock units with service-based vesting conditions only, the valuation model, typically the Black-Scholes
option-pricing model, incorporates various assumptions including expected stock price volatility, expected term, and risk-free rates.
For stock options or restricted stock units with graded vesting, the fair- value-based measure is estimated of the entire award by using
a single weighted-average expected term. The Company estimated the volatility of common stock on the date of the grant based on weighted-average
historical stock price volatility of comparable publicly traded companies in its industry group. The risk-free rate is based on the U.S.
Treasury yield curve in effect at the time of grant with a term equal to the expected term. The Company estimates the term based on the
simplified method for employee stock options considered to be “plain vanilla” options as the Company’s historical share
option exercise experience does not provide a reasonable basis upon which to estimate the expected term. The expected dividend yield
is
The Company estimates a forfeiture rate on an annual basis for the purpose of computation of stock-based compensation expense. The rate is used consistently across the subsequent interim periods during the year.
In case of cancellation of stock-based awards with no concurrent grant of a replacement award or other valuable consideration, any unrecognized compensation cost is recognized immediately on the cancellation date.
| xxi. | Debt |
The debt instruments of the Company consist of debentures and term loans from financial institutions. The Company based on available proceeds makes periodic prepayments of scheduled instalments and the same has been accounted for under ASC 470-50.
Unsecured Notes
During
the six months ended September 30, 2025, the Company has issued Bridge Notes which are repayable at the principal value along with an
interest of
Convertible Notes
During
the six months ended September 30, 2025, the Company has issued Convertible Notes which are repayable at the principal value along with
an interest of
18
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
Issuance costs on Debt
Debt issuance costs consist primarily of initial discount provided, arrangement fees paid to placement agent, professional fees and legal fees. These costs are netted off with the related debt and are being amortized to interest expense over the term of the related.
The debt has been classified into current or non-current based on the payment terms of the debt instruments. Non-current obligations are those scheduled to mature beyond twelve months from the date of the Company’s Condensed Consolidated Balance Sheets.
| xxii. | Warrants |
When the Company issues warrants, it evaluates the balance sheet classification of the warrant to determine whether the warrant should be classified as equity or as a derivative liability on the Condensed Consolidated Balance Sheets. In accordance with ASC 815- 40, Derivatives and Hedging- Contracts in the Entity’s Own Equity (ASC 815-40), the Company classifies a warrant as equity so long as it is “indexed to the Company’s equity” and several specific conditions for equity classification are met. A warrant is not considered indexed to the Company’s equity, in general, when it contains certain types of exercise contingencies or adjustments to exercise price. If a warrant is not indexed to the Company’s equity or it has net cash settlement that results in the warrants to be accounted for under ASC 480, Distinguishing Liabilities from Equity, or ASC 815-40, it is classified as a derivative liability which is carried on the Condensed Consolidated Balance Sheets at fair value with any changes in its fair value recognized currently in the Condensed Consolidated Statements of Operations.
| (a) | Warrants issued towards the November 2024 and December 2024 offering: |
During the year ended March 31, 2025, the Company issued shares of Common Stock, pre- funded, Series A and Series B warrants in the November 2024 and December 2024 offering and as consideration to the placement agents for the issuance. The Common stock and pre- funded warrants were classified as equity in accordance with ASC 815-40. The Series A warrants and Series B warrants were initially classified as derivative financial instruments in accordance with ASC 815-10-15-83.
Subsequently, during the year ended March 31, 2025, the variability in number of warrants exercisable towards Series A and Series B of both the November 2024 and December 2024 offering was fixed in accordance with agreement. Hence, as per ASC 815-10, the outstanding Series A Series B warrants for both November 2024 and December 2024 offering have been reclassified to equity at the reclassification date fair value.
19
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
Warrants exercised before the reclassification have been reclassified at their respective exercise date fair value and warrants exercised after the reclassification were adjusted with additional paid in capital.
| (b) | Warrants issued along with Redeemable Promissory Note: |
During the year ended March 31, 2025, the Company issued warrants along with Redeemable Promissory Note and as consideration to the placement agent for the issuance of the Redeemable Promissory Note. These warrants were classified as equity in accordance with ASC 815-40 on the initial recognition.
| xxiii. | Net profit/(loss) per share attributable to common stockholders |
The Company computes net profit/(loss) per share using the two-class method required for participating securities. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all the income for the period had been distributed. The Company’s convertible preferred stock is participating security. The holders of the convertible preferred stock would be entitled in preference to common shareholders, at specified rate, if declared.
Then any remaining earnings would be distributed to the holders of common stock and convertible preferred stock on a pro-rata basis assuming conversion of all convertible preferred stock into common stock. This participating security do not contractually require the holders of such shares to participate in the Company’s losses. As such, net losses for the periods presented were not allocated to the Company’s participating securities.
The Company’s basic profit/(loss) per share is computed using the weighted-average number of ordinary shares outstanding during the period. The diluted profit/(loss) per share is computed by considering the impact of potential issuance of common stock on the weighted average number of shares outstanding during the period, except where the results would be anti- dilutive.
| xxiv. | Provisions and accrued expenses |
A provision is recognized in the Condensed Consolidated Balance Sheets when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are recognized at present value by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money.
20
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract. The Company does not have any onerous contracts.
| xxv. | Fair value measurements and financial instruments |
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with ASC 820, Fair Value Measurement (“ASC 820”), the Company uses the fair value hierarchy, which prioritizes the inputs used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are set forth below:
| Level 1 | Observable inputs such as quoted prices in active markets for identical assets or liabilities. | |
| Level 2 | Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly for the full term of assets or liabilities. | |
| Level 3 | Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities. |
During the six months ended September 30, 2025, the Company’s primary financial instruments included cash and cash equivalents, investments, accounts receivables, other financial assets, accounts payable, debt, unsecured convertible note and other financial liabilities. The estimated fair value of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to short-term maturities of these instruments.
| xxvi. | Troubled debt restructuring |
As per ASC 470-60 Troubled Debt Restructuring (TDR) refers to a situation where the creditor, grants concessions to a borrower experiencing financial difficulties. These concessions may include modifications to the terms of the payable, such as reducing the interest rate, extending the repayment period, or forgiving a portion of the payable. Such restructuring is done with the intent to provide relief to the borrower and to maximize the potential for payable recovery by the Company.
21
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
In accordance with ASC 470-60, when the total future cash payments under the new terms are less than the carrying amount of the payable at the date of restructuring, the difference between the carrying amount and the total future cash payments is recognized as a ‘Gain on Troubled Debt Restructuring’ in the Condensed Consolidated Financial Statements. This gain is recorded immediately in the period the restructuring occurs.
If the total future cash payments under the new terms exceed the carrying amount of the payable at the date of restructuring, no adjustment to the carrying amount of the payable is made. Instead, the company calculates a New Effective Interest Rate (EIR) based on the revised terms of the restructured payable. The debt is then amortized over the remaining life of the payable using the new EIR, with interest expense recognized based on this rate in future periods.
| xxvii. | Taxes |
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest related to unrecognized tax benefits in interest expense and penalties.
| xxviii. | Contingencies |
The Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company accrues for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change.
| xxix. | Segment information |
Operating segments are defined as components of an entity for which discrete financial information is available and is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in making decisions regarding resource allocation and performance assessment. The Company’s CODM is its . The Company has determined it has one operating and reportable segment as the CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.
22
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
| xxx. | Common Stock Reverse Split |
In October 2024 and March 2025, the Company effectuated a one-for-hundred and a one-for- twenty reverse stock split, respectively. All share, stock option and warrant information has been retroactively adjusted to reflect these stock splits.
| xxxi. | Reclassification |
Certain prior year amounts have been reclassified to conform with current year presentation. These changes did not have any effect on net loss, stockholder's equity, the Condensed Consolidated Statements of Operations or the net change in cash and cash equivalents in the Condensed Consolidated Statement of Cashflows.
| xxxii. | Recent Accounting Pronouncements |
Accounting Pronouncement Pending Adoption
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” to improve income tax disclosure requirements by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of ASU 2023-09 will have on its Condensed Consolidated Financial Statements and disclosures.
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Disaggregation of Income Statement Expenses, which requires public companies to disaggregate key expense categories such as inventory purchases, employee compensation and depreciation in their financial statements. Further, in January 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2025-01, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date” which clarifies the effective date of ASU 2024-03. The guidance is effective for all public entities with fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2024-03 will have on the Company’s Condensed Consolidated Financial Statements.
In December 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2024-03, “Debt—Debt with Conversion and Other Options (Subtopic 470- 20): Induced Conversions of Convertible Debt Instruments”. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2025 (and interim reporting periods within those annual reporting periods). Early adoption is permitted as of the beginning of a reporting period if the entity has also adopted ASU 2020-06 for that period. This update does not have any impact on the Company’s Condensed Consolidated Financial Statements.
23
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 2. | Summary of Significant Accounting Policies (Continued) |
In May 2025, the FASB issued ASU 2025-03 which revises the guidance in ASC 805 on identifying the accounting acquirer in a business combination in which the legal acquiree is a variable interest entity (VIE). ASU 2025-03 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The amendments in ASU 2025-03 must be applied prospectively to any business combination that occurs after the initial adoption date. The Company is evaluating the impact that adoption of the provisions of ASU 2025-03 will have on the Company’s Condensed Consolidated Financial Statements.
In May 2025, the FASB issued ASU 2025-04 which clarifies the guidance in both ASC 606 and ASC 718 on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer. ASU 2025-04 is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2025- 04 will have on the Company’s Condensed Consolidated Financial Statements.
In July 2025, the FASB issued ASU 2025-05 which amends ASC 326-202 to provide a practical expedient (for all entities) and an accounting policy election (for all entities, other than public business entities, that elect the practical expedient) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. This update does not have any impact on the Company’s Condensed Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-06 which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The update clarifies the guidance for accounting for costs related to internal use-software. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. This update does not have any impact on the Company’s Condensed Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-07 which refines the scope of the guidance on derivatives in ASC 815 and clarifies the guidance on share-based payments from a customer in ASC 606. The ASU is intended to address concerns about the application of derivative accounting to contracts that have features based on the operations or activities of one of the parties to the contract and to reduce diversity in the accounting for share-based payments in revenue contracts. ASU 2025-07 is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact that adoption of the provisions of ASU 2025-07 will have on the Company’s Condensed Consolidated Financial Statements.
There are other new accounting pronouncements issued by the FASB that the Company has adopted or will adopt, as applicable, and the Company does not believe any of these accounting pronouncements have had, or will have, a material impact on its Condensed Consolidated Financial Statements or disclosures.
24
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 3A | Reverse Stock Split |
The
Company’s shareholders authorized, and the Board of Directors approved for a
Every
The
Company’s shareholders authorized, and the Board of Directors approved for a
Every
| 3B | Troubled Debt Restructuring |
Payable against rental dues
On
April 22, 2025, the Company entered into a settlement agreement with Siddharth Assets, wherein the lessor has waived a portion of the
outstanding liability and penalty accrued thereon. The Company agreed to make settlement in four monthly instalments, starting from April
2025. In the event of default, $
The
Company has accounted for this transaction as troubled debt restructuring under ASC 470-60. The gain on troubled debt restructuring recorded
for the three months and six months ended September 30, 2025 is $ and $
Accounts Payable
During the year ended March 31, 2025, the Company carried out negotiations with its vendors and as per the revised agreements with the vendors, they have granted a short-term deferral in payments and/or reduction in outstanding liability.
The Company has accounted for this transaction as troubled debt restructuring under ASC 470-60 and the same was recorded as a net gain on troubled debt restructuring in the Consolidated Statements of Operations during the year ended March 31, 2025. As per the terms of the revised contract with one of its vendor, the Company had to pay the remaining liability within a specified period of time otherwise the reduction in liability will be reversed.
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25
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 4 | Cash and cash equivalents |
The components of cash and cash equivalents were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Balances in bank accounts* | $ | $ | ||||||
| Cash and cash equivalents | $ | $ | ||||||
| * | |
| 5 | Accounts receivable, net of allowance for credit losses |
The components of accounts receivable were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Accounts receivable | $ | $ | ||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Net accounts receivable | $ | $ | ||||||
The Company records an allowance for credit losses for amounts owed for completed transactions that may never settle or be collected. For the three months and six months ended September 30, 2025, allowance amounting to $ and $ respectively was created for expected credit losses respectively (March 31, 2025 :$).
Movement in allowance for expected credit loss
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Balance at the beginning of the period | $ | $ | ||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Closing balance | $ | $ | ||||||
26
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 6 | Balances with government authorities |
The components of balances with government authorities were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Current | ||||||||
| Goods and service tax receivable | $ | $ | ||||||
| Less: Impairment* | ( | ) | ( | ) | ||||
| $ | $ | |||||||
| * |
| 7 | (a) | Other current assets |
The components of other current assets were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Security deposits | $ | $ | ||||||
| Franchise tax refund receivable | ||||||||
| Advance to employees | ||||||||
| Advance to suppliers | ||||||||
| Receivables from car sale | ||||||||
| Other receivables | ||||||||
| Other current assets | $ | $ | ||||||
27
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 8 | Assets held for sale |
The components of assets held for sale were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Vehicles | $ | $ | ||||||
| Total assets held for sale | $ | $ | ||||||
Vehicles represent the vehicles held
for sale in the Indian subsidiary, Zoomcar India Private Limited. The gain or loss on sale of these assets is included in (Gain)/Loss
on sale of assets held for sale under Other (income)/expense of Condensed Consolidated Statements of Operations. During the three months
and six months ended September 30, 2025, total gain of $
| 9 | Property and equipment, net |
The components of property and equipment were as follows:
| (In USD) As at | Estimated useful life | September 30, 2025 | March 31, 2025 | |||||||
| Vehicles and devices | $ | | $ | |||||||
| Computer equipments | ||||||||||
| Office equipments | ||||||||||
| Furniture and fixtures | ||||||||||
| Total, at cost | ||||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||||
| $ | $ | |||||||||
| Right-of-use assets under finance leases: | ||||||||||
| Vehicles, at cost | $ | $ | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||
| Accumulated impairment | ( | ) | ( | ) | ||||||
| $ | $ | |||||||||
| Total property and equipment, net | $ | $ | ||||||||
Depreciation
expense for the three months and six months ended September 30, 2025 was $
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28
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 10 | Leases |
The
Company’s leases primarily include vehicles and corporate offices which have been classified as and operating leases,
respectively. The lease term of operating and finance leases varies between
The components of lease expense were as follows:
| (In USD) Period ended | September 30, 2025 | March 31, 2025 | ||||||
| Interest on finance lease liabilities | $ | $ | ||||||
| Operating lease cost | ||||||||
| Short term lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
Supplemental cash flow information related to leases was as follows:
| (In USD) Period ended | September 30, 2025 | March 31, 2025 | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash outflows for operating leases | $ | ( | ) | $ | ( | ) | ||
| Financing cash outflows for finance leases | $ | ( | ) | $ | ( | ) | ||
29
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 10 | Leases (Continued) |
Supplemental balance sheet information related to leases was as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Operating Leases | ||||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Current operating lease liabilities | $ | $ | ||||||
| Non-current operating lease liabilities | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
| Finance Leases | ||||||||
| Property and equipment, at cost | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Accumulated impairment | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
| Current finance lease liabilities | $ | $ | ||||||
| Total finance lease liabilities | $ | $ | ||||||
| Weighted Average Remaining Lease Term | ||||||||
| Operating leases | | |||||||
| Finance leases | |
| Weighted Average Discount Rate | ||||||||
| Operating leases | % | % | ||||||
| Finance leases | % | % | ||||||
The Company determines the incremental borrowing rate by adjusting the benchmark reference rates, with appropriate financing spreads applicable to the respective geographies where the leases were entered and lease specific adjustments for the effects of collateral.
| Six months ended September 30, 2025 | Year ended March 31, 2025 | |||||||||||||||
| Maturities of lease liabilities are as follows: | Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||
| 2026 | $ | $ | $ | $ | ||||||||||||
| 2027 | ||||||||||||||||
| 2028 | ||||||||||||||||
| 2029 | ||||||||||||||||
| Total Lease Payments | $ | $ | $ | $ | ||||||||||||
| Less : Imputed Interest | ||||||||||||||||
| Total Lease Liabilities | $ | $ | $ | $ | ||||||||||||
As
at September 30, 2025, the Company continues to default on equated monthly installments (EMI) payments owed to Leaseplan India Private
Limited (Lender). In adherence to the agreement, the Company has accumulated penal interest at a simple interest rate of
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30
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 11 | Investments |
The components of investments were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Long term investments | ||||||||
| Investments in certificate of deposits* | $ | $ | ||||||
| $ | $ | |||||||
| * |
| 12 | Other non-current assets |
The components of other non-current assets were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Security deposits | $ | $ | ||||||
| Deposits with tax authorities | ||||||||
| Restricted cash* | ||||||||
| Other non-current assets | $ | $ | ||||||
| * |
| 13 | Accounts Payable |
The components of accounts payable were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Current | ||||||||
| Accounts payable towards related parties | $ | $ | ||||||
| Accounts Payable towards others | ||||||||
| Total accounts payable | $ | $ | ||||||
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31
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 14 | Debt |
The components of long term and short term debt were as follows:
| (In USD) As at | Effective interest rates | Original Maturities* | September 30, 2025 | March 31, 2025 | ||||||||
| Current | ||||||||||||
| From NBFCs | ||||||||||||
| - Mahindra & Mahindra Financial Services Limited | $ | $ | ||||||||||
| - TATA Motors Finance Limited | ||||||||||||
| - Kotak Mahindra Financial Services Limited | ||||||||||||
| - Orix Leasing and Financial Services India LTD | ||||||||||||
| - Clix Finance India Private Limited | ||||||||||||
| - AON Risk Insurance Services West, Inc | ||||||||||||
| $ | $ | |||||||||||
| Total maturity for the year ending on September 30, 2026 | ||||||||||||
| $ | ||||||||||||
| * |
The
Company has recorded an interest expense amounting to $
As of September 30, 2025, the Company
has defaulted on debt obligations owed to various lenders totaling to $
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32
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 14A | Unsecured notes |
The following is a summary of the Company’s Unsecured notes payable as of September 30, 2025 and March 31, 2025:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Bridge notes | $ | $ | ||||||
| Less: Discount and debt issuance cost on issuance, net of amortization | ( | ) | ||||||
| Total | $ | $ | ||||||
On June 23, 2025, the Company entered
into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued Bridge notes
for a total principal amount of $
On
July 31, 2025, the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to
which the Company issued Bridge notes for a total principal amount of $
The discount and issuance cost on bridge notes has been amortized over the contractual period using the effective interest method. The unamortized discount and issuance cost have been presented as net of the bridge notes or promissory note liability.
Terms of Bridge notes
In
the event of an uncured default under either of the Bridge notes, the holder has the right to elect to convert the outstanding amount
(includes principal, accrued interest, default interest, and other fees as applicable) into the Company’s Common stock at a conversion
price equal to
The
interest on the Unsecured notes was $
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33
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 14B | Convertible notes |
The following is a summary of the Company’s Convertible Redeemable notes payable as of September 30, 2025 and March 31, 2025:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Convertible Redeemable notes | $ | $ | ||||||
| Less: Discount and debt issuance cost on issuance, net of amortization | ( | ) | ||||||
| Promissory note | $ | $ | ||||||
| Less: Discount and debt issuance cost on issuance, net of amortization | ( | ) | ||||||
| Total | $ | $ | ||||||
On
August 24, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant
to which the Company issued convertible redeemable notes for a total principal amount of $
On August 19, 2025 , the Company entered
into Securities Purchase Agreement with certain institutional accredited investor pursuant to which the Company issued a Promissory Note
for a total principal amount of $
Terms of Convertible notes
The
convertible redeemable notes issued have a maturity date of
The
Holders of these convertible redeemable notes is entitled, at its option, at time specified in the agreements, to convert all or any
amount of the principal face amount of these convertible redeemable notes then outstanding into shares of the Company’s common
stock (the “Common Stock”) at a price (“Conversion Price”) equal to
Terms of Promissory notes
The
Promissory notes have a maturity date of
The
Holder shall have the right, on any Trading Day, at any time on or following the earlier of (i) the date that an Event of Default occurs
under this Note or (ii) the date that that is one hundred eighty (180) calendar days after the Issue Date, to convert all or any portion
of the then outstanding and unpaid Principal Amount and interest (including any Default Interest) into fully paid and nonassessable shares
of Common Stock. The per share conversion price into which Principal Amount and interest (including any Default Interest) under this
Note shall be convertible into shares of Common Stock hereunder as further described in this Note (the “Conversion Price”)
shall equal the Market Price (as defined in this Note), subject to adjustment as provided in this Note. “Market Price” shall
mean
The
interest on the convertible redeemable notes was $
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34
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 15 | Unsecured convertible note (‘Atalaya Note’) |
The following is a summary of the Company’s Atalaya Note payable for which it elected fair value option as on September 30, 2025 and March 31, 2025:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Atalaya Note | $ | $ | ||||||
| Total | $ | $ | ||||||
The
Atalaya Note was initially recorded at the fair value of $
During
the year ended March 31, 2025, partial liability was settled by issue of
Further
during the year ended March 31, 2025, the Company received notices from Atalaya regarding equity line transactions and incurring debt
without the Purchaser’s consent. Atalaya filed a case against the Company seeking relief from the above mentioned defaults. On
March 28, 2025, the Supreme Court of the state of New York ordered the Company to pay the outstanding principal amount along with interest
accrued till date amounting to $
The
change in fair value resulted in loss of $
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35
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 16 | Other current liabilities |
The components of other current liabilities were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| Payable to customers | $ | $ | ||||||
| Statutory dues payable | ||||||||
| Capital creditors | ||||||||
| Employee benefit expenses payable | ||||||||
| Other liabilities* | ||||||||
| Other current liabilities | $ | $ | ||||||
| * |
| 17 | Accumulated other comprehensive income/ (loss) |
The components of accumulated other comprehensive income/(loss) were as follows:
| (In USD) As at | September 30, 2025 | March 31, 2025 | ||||||
| (Loss)/ Gain on employee benefit | ||||||||
| Balance, beginning of period | $ | ( | ) | $ | ||||
| Recognized during the period, net of taxes amounts to $ | ( | ) | ( | ) | ||||
| Reclassification to net income: Amortization gains | ( | ) | ( | ) | ||||
| Balance, end of period | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation adjustment | ||||||||
| Balance, beginning of period | $ | $ | ||||||
| Translation adjustment on derecognition of subsidiary | ( | ) | ||||||
| Translation adjustments gain recognized during the period, net of taxes amounts to $ | ||||||||
| Balance, end of period | $ | $ | ||||||
| Accumulated other comprehensive income | $ | $ | ||||||
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36
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 18 | Capital Stock and Warrants |
During the year ended March 31,2025, the Company executed four equity offerings. These offerings involved the sale of Common Stock, Pre-Funded Warrants, Series A Warrants and a maximum number of Series B Warrants as defined in the respective agreements.
Holders
of common stock are entitled to
Series
A warrants were issued with initial exercise prices of $
As
of September 30, 2025,
As
of September 30, 2025, the Company has issued
Further,
during the six months ended September 30, 2025, the Company has issued
As
of September 30, 2025, the Company has
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37
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 19 | Revenue |
The components of revenue, net were as follows:
| (In USD) | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue from services | ||||||||||||||||
| Facilitation revenue (net) | $ | $ | $ | $ | ||||||||||||
| Other operating revenues | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||
| Revenue by geographical location | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| India | $ | $ | $ | $ | ||||||||||||
| Egypt | ||||||||||||||||
| Indonesia | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Contract balances
The Company’s contract liabilities
for consideration collected prior to satisfying the performance obligations against scheduled trips is $
During the six months ended September 30, 2025, the Company has offered vouchers that results in the deferral of revenue equivalent to
amount received on the date of purchase of such vouchers. The accumulated deferred revenue in relation to vouchers issued amounts to
$
Further, the Company offers loyalty program, Z-Points, that results in the deferral of revenue equivalent to the retail value on the
date points are earned. The Company had accumulated deferred revenue amounting to $
The total balance under contract liability
as at September 30, 2025 and March 31, 2025 is $
Revenue recognized during the three
months and six months ended September 30, 2025 which was included in contract liabilities balance at the beginning of the respective period
amounts to $
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38
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 20 | Finance costs |
The components of finance costs were as follows:
| (In USD) | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Finance costs -other than related parties | ||||||||||||||||
| Interest on vehicle loans | $ | $ | $ | $ | ||||||||||||
| Interest on finance leases | ||||||||||||||||
| Interest on subcontractor liability | ||||||||||||||||
| Interest on redeemable promissory notes | ||||||||||||||||
| Interest on unsecured notes | ||||||||||||||||
| Interest on Convertible notes | ||||||||||||||||
| Change in fair value of Atalaya Note | ||||||||||||||||
| Bank charges | ||||||||||||||||
| Other borrowings cost | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| 21 | Other expense/(income), net |
The components of other (income)/expense, net were as follows:
| (In USD) | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Other expense/(income), net - other than related parties | ||||||||||||||||
| Interest income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Change in fair value of Atalaya Note | ( | ) | ||||||||||||||
| Gain on sale of property & equipment | ( | ) | ||||||||||||||
| (Gain)/Loss on sale of assets held for sale | ( | ) | ( | ) | ( | ) | ||||||||||
| Gain on derecognition of subsidiary (Refer Note 27) | ( | ) | ( | ) | ||||||||||||
| Liquidated damages payable to Investors** | ||||||||||||||||
| Impairment on assets held for sale | ||||||||||||||||
| Loss on assets written off | ||||||||||||||||
| Payable to customers and provision written back | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on recovery of goods and service tax receivable | ( | ) | ( | ) | ||||||||||||
| Other, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| ** |
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39
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 22 | Income taxes |
The components of (loss)/gain before income taxes consist of the following:
| (In USD) | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Domestic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Foreign | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Zoomcar Holdings, Inc. files tax returns in the U.S. federal, various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. Our major tax jurisdiction is in India. The Indian tax authority is currently examining our 2016 through 2023 tax returns. There are other ongoing audits in various other jurisdictions that are not material to our financial statements.
The Company has filed appeals against the above orders before higher authority.
The
Company has computed income tax expense/(benefit) for the three months ended September 30, 2025 and September 30, 2024 by using a forecasted
annual effective tax rate and adjust for any discrete items arising during the period. The Company has recorded $ tax expense for
the given periods. Our effective tax rate was
The Company has received various orders from Indian tax authorities, for details Refer Note 29.
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40
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 23 | Net loss per share |
The components of basic and diluted loss per share were as follows:
| (In USD, except loss per share) | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net loss available for common shareholders (A) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average outstanding shares of common stock (B) # | ||||||||||||||||
| Common stock and common stock equivalents (C) # | ||||||||||||||||
| Loss per share | ||||||||||||||||
| Basic (A/B) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted (A/C) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Since
the Company was in a loss position for the three months and six months ended September 30, 2025 and September 30, 2024, basic loss per
share was same as diluted net loss per share for the periods presented.
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Stock options* | ||||||||||||||||
| Public warrants | ||||||||||||||||
| Private warrants | ||||||||||||||||
| Warrants issued in November 2024 and December 2024 offering (including Second and Third closing of December offering) | ||||||||||||||||
| Total | ||||||||||||||||
| * |
| # |
| 24 | Employee benefit plans (unfunded) |
Employee
benefit plans includes gratuity and compensated absences payable to employees. These benefit plans consist of a defined benefit plan
for gratuity payable by the Indian subsidiary of the Company under Indian regulations. These are determined under the projected unit
credit method, with actuarial valuations being carried out at each reporting date. The retirement benefit obligations recognized in the
Consolidated Balance Sheets represents the present value of the defined obligations. Under an employee benefit plan, it is the Company’s
obligation to provide agreed benefits to the employees. The related actuarial and investment risks fall on the Company.
| Pension and other employee obligations As at | September 30, 2025 | March 31, 2025 | ||||||
| Current | ||||||||
| Gratuity | $ | $ | ||||||
| Compensated absences | ||||||||
| $ | $ | |||||||
| Non-current | ||||||||
| Gratuity | $ | $ | ||||||
| Compensated absences | ||||||||
| Other statutory dues | ||||||||
| $ | $ | |||||||
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41
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 24 | Employee benefit plans (unfunded) (Continued) |
| I. | Gratuity |
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Changes in projected benefit obligation (PBO) | ||||||||||||||||
| PBO at the beginning of the year | $ | $ | $ | $ | ||||||||||||
| Service cost | ||||||||||||||||
| Interest cost | ||||||||||||||||
| Actuarial loss | ( | ) | ( | ) | ||||||||||||
| Benefits paid | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Effect of exchange rate changes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| PBO at the end of the period | $ | $ | $ | $ | ||||||||||||
| Accrued pension liability | ||||||||
| Current liability | $ | $ | ||||||
| Non-current liability | ||||||||
| $ | $ | |||||||
| Accumulated benefit obligation | $ | $ | ||||||
| Net gratuity cost recognized in income statement | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Service cost | $ | $ | $ | $ | ||||||||||||
| Interest cost | ||||||||||||||||
| Amortization of net actuarial gains | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net periodic benefit cost | $ | $ | $ | $ | ||||||||||||
| Re-measurement losses in other comprehensive income | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Actuarial Loss | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||
| Amortization loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||
| Components of actuarial gain: | Three months ended September 30, | Six months ended September 30, | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Actuarial loss/(gain) due to demographic assumption changes in defined benefit obligation | $ | ( | ) | $ | $ | $ | ||||||||||
| Actuarial loss/(gain) due to financial assumption changes in defined benefit obligation | ( | ) | ||||||||||||||
| Actuarial loss due to experience on defined benefit obligation | ( | ) | ( | ) | ||||||||||||
| Total | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||
42
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 24 | Employee benefit plans (unfunded) (Continued) |
The assumptions used in accounting for the gratuity plan are as follows:
| September 30, 2025 | September 30, 2024 | |||||||
| Discount rate - staff | % | % | ||||||
| Discount rate - independent service provider* | % | % | ||||||
| Attrition rate - staff | % | % | ||||||
| Attrition rate - independent service provider* | % | % | ||||||
| Rate of increase in compensation levels - staff | % | % | ||||||
| Rate of increase in compensation levels - independent service provider* | % | % | ||||||
| * |
During the quarter ended September 30, 2025 and September 30, 2024, actuarial gain was driven by changes in actuarial assumptions, offset by experience adjustments on present value of benefit obligations.
The
Company evaluates these assumptions annually based on its long-term plans of growth and industry standards.
| Expected benefit payments as of September 30, 2025 is as follows: | ||||
| Year ended March 31, | ||||
| 2026 (October 1, 2025 till March 31, 2026) | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
43
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 24 | Employee benefit plans (unfunded) (Continued) |
| II. | Compensated absences |
The
employees are permitted to encash a maximum of 45 days of accumulated leave balance on separation. The Company has provided liability
for compensated absences as per an actuarial valuation carried out by an independent actuary as of the Balance Sheet dates. The amount
of compensated absences cost is $
| III. | Defined contribution plan |
The
Indian subsidiary makes provident fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes,
the Indian subsidiary is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions are
made to provident fund in accordance with the fund rules. The interest rate payable to the beneficiaries every year is notified by the
Government. The amount of contributions made to provident fund is $
| 25 | Stock-based compensation expense |
The
Company adopted the 2023 Equity and Incentive Plan, which provides for grants of share-based awards, including Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units (“RSUs”), and other forms of share-based awards. The Company settles employee
stock-based options with newly issued common stock of the Company. The Company has reserved
In
addition, the number of shares of common stock reserved and available for issuance under the 2023 Plan will automatically increase on
January 1 of each year for a period of ten years, beginning on January 1, 2024 and on each January 1 thereafter until January 1, 2033,
by a number equal to (i)
Additionally,
during the year ended March 31, 2025, the stockholders approved a one-time increase in the number of Common Stock shares reserved for
issuance under the 2023 Plan. The increase is equal to
On February 12, 2025, the Company granted
On
August 4, 2025, the Company granted an additional
The following tables summarizes total stock-based compensation expense by function for the three and six months ended September 30, 2025 and September 30, 2024:
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Cost of revenue | $ | $ | $ | $ | ||||||||||||
| Technology expenses | ||||||||||||||||
| Marketing expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total stock-based compensation expense | ||||||||||||||||
44
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 25 | Stock-based compensation expense (Continued) |
The
fair value of options granted is estimated on the date of grant using the Black-Scholes- option-pricing model using the weighted average
assumptions.
| September 30, 2025 | September 30, 2024 | |||||||
| Dividend yield | % | |||||||
| Expected volatility | % | |||||||
| Risk-free interest rate | .68
- | % | ||||||
| Exercise price | - | |||||||
| Expected life (in) | - | |||||||
| Stock price | ||||||||
| Attrition rate | % | |||||||
The movement in number of stock-based options outstanding and their related weighted average exercise price for the 2023 Plan are as follows:
| Six months ended September 30, | Six months ended September 30, | |||||||||||||||
| 2025 | 2024 | |||||||||||||||
| No. of options | Weighted average exercise price | No. of options | Weighted average exercise price | |||||||||||||
| Outstanding at the beginning of the year | $ | $ | ||||||||||||||
| Add: Granted during the year | ||||||||||||||||
| Less: Cancelled during the year | ( | ) | ||||||||||||||
| Outstanding at the end of the period | ||||||||||||||||
| Exercisable at the end of the period | ||||||||||||||||
| Unvested at the end of the period | ||||||||||||||||
The
compensation cost of non-vested awards not yet recognized as of September 30, 2025, is $
The total intrinsic value at the date of exercise for the options exercised during the six months ended September 30, 2025 is (September 30, 2024 : )
Restricted shares issued to CEO
On
May 9, 2025, the Company entered into a consulting agreement with Mr. Deepankar Tiwari to engage him as the Chief Executive Officer (“CEO”)
of the Company. As consideration for services rendered, Mr. Tiwari shall be eligible to receive a monthly consultancy fee and restricted
shares of the Company. As per the terms of the agreement,
The
Company has registered
During the six months ended September
30, 2025,
45
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 26 | Related Party Transactions |
Key managerial personnel (KMP)
| Gregory Bradford Moran | |
| Hiroshi Nishijima | |
| Uri Levine | |
| Evelyn D’An | |
| Graham Gullan | |
| Swatick Majumdar | |
| Mohan Ananda | |
| Madan Menon | |
| John Robert Clarke | |
| Mark Bailey | |
| Deepankar Tiwari |
Related party transactions pertaining to debt, investments, and other current liabilities have been stated on the face of the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.
The Company had following transactions with related parties:
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Consultancy Charges | ||||||||||||||||
| Deepankar Tiwari | $ | $ | $ | $ | ||||||||||||
The Company has the following outstanding balances with related parties:
| As at | 30-Sep-25 | March 31, 2025 | ||||||
| Payable to Director | ||||||||
| Mohan Ananda | $ | $ | ||||||
| Accounts Payable | ||||||||
| Uri Levine | $ | $ | ||||||
| Deepankar Tiwari | $ | $ | ||||||
| $ | $ | |||||||
(This space has been left intentionally blank)
46
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 27 | Variable Interest Entities |
An entity is a VIE if it has any of the following characteristics :
| ● | The entity does not have enough equity to finance its activities without additional subordinated financial support. |
| ● | The equity holders, as a group, lack the characteristics of a controlling financial interest. |
| ● | The entity is structured with non-substantive voting rights (i.e., an anti-abuse clause). |
We consolidate VIEs in which Company hold a variable interest and are the primary beneficiary. Company is the primary beneficiary because it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that potentially could be significant to the VIE and the right to receive benefits from the VIE that potentially could be significant to the VIE (benefits). As a result, we consolidate the assets and liabilities of these consolidated VIEs.
The VIEs have been incorporated in their respective locations to perform the business of providing mobility solutions to consumers and businesses.
The following table summarizes the assets and liabilities related to the Company’s consolidated VIEs:
| September 30, 2025 | March 31, 2025 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Other current assets | $ | $ | ||||||
| Long term Investments | $ | $ | ||||||
| Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Current portion of pension and other employee obligations | $ | $ | ||||||
| Other current liabilities | $ | $ | ||||||
| Nature of investment in the VIEs is as follows: | ||||||
| Name of the VIE | Place of incorporation | Nature of investment | Investor entity | |||
| Fleet Mobility Philippines Corporation * | ||||||
These amounts have been eliminated during the process of consolidation.
| * |
In August 2023, Zoomcar Vietnam Mobility
LLC had filed for bankruptcy with the local authorities. This application was admitted by the local authorities and bankruptcy proceedings
were ordered to commence on June 4, 2025. In accordance with ASC 810-10-15-10, the Company consolidated the VIE till June 3, 2025 since
the Company held a variable interest and continued to be the primary beneficiary. However on June 04, 2025, the Company ceased to be the
primary beneficiary and consequently, the Company has derecognized its cost of investment and assets and liabilities of the VIE and recognized
a gain upon derecognition of VIE amounting to $
On June 3, 2024, Zoomcar Egypt Car Rental LLC had closed down its operations due to decrease in operations and rising economic difficulties. On December 15, 2024, Zoomcar Egypt Car Rental LLC held an extraordinary general meeting to initiate the liquidation process and appoint a liquidator. Subsequently, on August 5, 2025, Zoomcar Egypt Car Rental LLC’s name was deleted from the commercial register.
In
accordance with ASC 810-10-15-10, the Company consolidated the VIE till August 4, 2025 since the Company held a variable interest and
continued to be the primary beneficiary. However on August 05, 2025, the Company ceased to be the primary beneficiary and consequently,
the Company has derecognized its cost of investment and assets and liabilities of the VIE and recognized a gain upon derecognition of
VIE amounting to $
The VIE included in the Condensed Consolidated Financial Statements is separate legal entity and its assets are legally owned by the entity and is not available to the Company’s creditors or creditors of the Company’s other subsidiaries.
Nature of, and changes (if any) in, the risks associated with a reporting entity’s involvement with the VIE
In case of all the entities, the reporting entity is exposed to foreign currency exchange risk of the subsidiaries since the subsidiaries are incorporated in countries other than the country in which the reporting entity has been incorporated.
47
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 28 | Financial Instruments - Fair Value Measurements |
ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability as against assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk.
| The carrying value of financial instruments not carried at fair value by categories are as below: | ||||||||
| As at | September 30, 2025 | March 31, 2025 | ||||||
| Carrying value | Carrying value | |||||||
| Financial assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Receivable from government authorities | ||||||||
| Long term investments | ||||||||
| Other financial assets | ||||||||
| Total assets | $ | $ | ||||||
| Financial liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Debt | ||||||||
| Unsecured notes | ||||||||
| Convertible notes | ||||||||
| Other financial liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:
| September 30, 2025 | ||||||||||||||||
| Total Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Assets held for sale | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Atalaya Note | $ | $ | $ | $ | ||||||||||||
| March 31, 2025 | ||||||||||||||||
| Total Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Assets held for sale | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Atalaya Note | $ | $ | $ | $ | ||||||||||||
48
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 28 | Financial Instruments - Fair Value Measurements (Continued) |
Level 2: The fair value of Assets held for sale not traded in an active market is determined using the quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly considering all the relevant factors of assets.
The Company’s recurring Level 3 financial instruments within the Company’s fair value hierarchy as of September 30, 2025 consist of Company’s unsecured convertible note.
Atalaya Note
On March 28, 2025, a court order was received for settlement of the Atalaya note. As of September 30, 2025, the Company’s fair value measurement of its Atalaya note reflects the carrying amount, as the obligation is immediately payable and no market premium or discount is applicable. This measurement is classified as Level 3 in the fair value hierarchy, with no valuation adjustments made due to the immediacy of settlement.
The changes in the fair value are summarized below:
| Unsecured Convertible | ||||
| Note (‘Atalaya Note’) | ||||
| Balance as of April 1, 2024 | $ | |||
| Shares issued to Atalaya Note holders | ( | ) | ||
| Change in fair value of unsecured convertible note | ( | ) | ||
| Balance as of June 30, 2024 | $ | |||
| Change in fair value of unsecured convertible note | ||||
| Balance as of September 30, 2024 | $ | |||
| Balance as of April 1, 2025 | ||||
| Change in fair value of derivative financial instruments | ||||
| Balance as of June 30, 2025 | $ | |||
| Change in fair value of unsecured convertible note | ||||
| Balance as of September 30, 2025 | $ | |||
During
the three months and six months ended September 30, 2025 and September 30, 2024 , there were
49
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 29 | Commitments and contingencies |
Contingencies
(A) Claims
filed by customers and third-parties not acknowledged as liability amounted to $
(B) The Company has received various
orders and show cause notices from Indian indirect tax authorities relating to disputes on input tax credits, service tax liabilities,
GST dues, and taxability of car rental revenue for periods between 2014 and 2023, totaling $
(C) In
February 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru
against Zoomcar India, Zoomcar, Inc. and Zoomcar Holdings, Inc. (formerly IOAC) challenging his termination, claiming damages amounting
to $
50
ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 29 | Commitments and contingencies (Continued) |
(D) On
November 1, 2024, Gregory Moran, a former employee of Zoomcar India, has filed a case with the Superior Court, Delaware, challenging
his termination without a cause or a sufficient notice, claiming $
(E) Zoomcar
Holdings, Inc. files tax returns in the U.S. federal, various state, and foreign jurisdictions. In the normal course of business, the
Company is subject to examination by tax authorities. Our major tax jurisdiction is in India. The Indian tax authority is currently examining
our 2016 through 2023 tax returns. There are other ongoing audits in various other jurisdictions that are not material to our financial
statements. The Company received an order for fiscal year 2015-16 in relation to non- deduction of tax deducted at source withholding
taxes on certain payments to resident payees/service providers amounting to $
The Company has not recognized any uncertain tax position as at September 30, 2025 and March 31, 2025, respectively. The Company believes these orders are unlikely to be sustained at the higher appellate authorities.
(F) On
August 2025, the Company received a notice from the legal representatives of certain holders of warrants to purchase Series E Preferred
Stock of Zoomcar, Inc. pursuant to the warrant agreement dated May 12, 2021. The warrant holders have raised a dispute regarding the
non-delivery of shares following the submission of their respective notices of exercise. The warrant holders are collectively entitled
to warrants amounting to $
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ZOOMCAR HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| 30 | Subsequent events |
(A) On August 7, 2025, the Company received a notice from OTC Markets Group Inc. (“OTC Markets”) indicating that the Company no longer meets certain eligibility requirements for continued trading on the OTCQX U.S. tier as per the OTCQX Rules for U.S Companies Section 2.1(B) with respect to market capitalization. Following receipt of the notice and after evaluating available alternatives, the Company elected to transition its quotation to the OTCQB tier of OTC Markets Group (“OTCQB”). On November 4, 2025, the Company’s ordinary shares commenced trading on the OTCQB under the ticker symbol “ZCAR.”
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three and six months ended September30, 2025 and 2024. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” included in this Form 10-Q. Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period. Amounts are presented in U.S. dollars.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Zoomcar,” “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Business Combination, the business and operations of Zoomcar Holdings, Inc. and its consolidated subsidiaries, and (ii) prior to the Business Combination, Zoomcar, Inc. (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiaries.
Overview
Zoomcar’s current business model is an online peer-to-peer car sharing platform which connects Hosts (car owners) with Guests (persons in temporary need of vehicles). Our business model is explained in details under the “Standard booking Flow” section below.
As of November 12, 2025, we had 6,902,727 shares of our Common Stock issued and outstanding. Except as otherwise indicated, all share and per share information in this report gives effect to second reverse stock split effected on March 21, 2025 at a ratio of 1-for-20.
Standard Booking Flow
We operated a peer-to-peer car sharing platform in emerging markets across three countries and generated revenues from bookings by our Guests of vehicles listed on our Zoomcar platform by our Hosts. Zoomcar receives a portion of the associated booking fee charged to the Guest (less any credits or discounts applied), as well as platform fees charged to Guests and Hosts and trip protection fees (which we refer to as “value-added fees”) charged to Guests. As further described below, other fees charged to Guests, such as fuel charges, are paid fully to Hosts, who also receive a revenue share equal to approximately 60% of booking fees and between 0% and 40% of certain other charges. We use our customized algorithm to price trips dynamically on the platform, leveraging our data from the millions of miles driven on our platform to intelligently price the risks of trips and the market, incorporating information about Guests informed by data we collect and Zoomcar management’s professional experience. While Hosts can opt to offer bookings at prices that are different from those the platform generates as recommendations, most Hosts tend to select the algorithmically derived pricing for their bookings. The functionality enabled by our customized pricing tools is reflected in both Guest booking fees and in the trip protection or “value-added fees” charged to Guests, who are presented with three algorithmically derived trip protection pricing options from which to choose. The revenue- generating components of a trip booked on our peer-to-peer car sharing platform include:
| ● | Charges to Guests: For each booking on our platform, the aggregate amount we charge the Guest consists of the upfront booking fee, value-added fees, the Guest platform fees, and certain other charges (e.g., late fees, trip extension fees, etc.). We refer to these fees collectively as the “gross booking value (GBV).” The booking fee and trip protection fees are determined algorithmically by our system at the time of booking inception, while other fees may be charged during or after the trip, depending on events arising during the trip. Neither Zoomcar nor our Host subsidize fuel costs for Guests. Guests cover their own fuel costs, which are in addition to the booking fee. |
| ● | Charges to Hosts: For each booking on our platform, we charge a “revenue share” to the Host based on a percentage of the booking fee plus other fees that are transferable to the Host. The average revenue share that Zoomcar receives from a booking on our platform is approximately 40%, with the Host retaining the remaining 60%. Our platform provides Hosts with a menu of incentives related to specific factors such as bookings served and minimum host ratings. We charge Hosts minimum marketplace fees to offset the costs of our installed devices. |
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Key Business Metrics
In addition to the measures presented in our Unaudited Condensed Consolidated Financial Statements, we use the following key business metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. We are not aware of any uniform standards for calculating these key metrics, which may hinder comparability with other companies that may calculate similarly titled metrics in a different way.
| For the three months Ended | For the six months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| (In thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Booking Days | 180 | 147 | 371 | 317 | ||||||||||||
| Gross Booking Value | $ | 6,226 | $ | 6,119 | $ | 12,698 | $ | 12,349 | ||||||||
Booking Days
We define “Booking Days” as total days (24 hours measured in minutes) that a vehicle is booked by Guests on our platform in a given period, for trips ended, net of total days relating to cancelled bookings in that period. We believe Booking Days is a key business metric to help investors and others understand and evaluate our results of operations in the same manner as our management team, as it represents a standardized unit of transaction volume on our platform in any given time period.
| (1) | Refers to calendar quarters (i.e., Q3-22 = July 01 to September 30, 2022). |
For the three months ended September 30, 2025, Booking Days on the platform totaled approximately 179,898, compared to 146,832 during the three months ended September 30, 2024.
For the six months ended September 30, 2025, Booking Days on the platform totaled approximately 370,829, compared to 316,957 during the six months ended September 30, 2024.
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Gross Booking Value
We define the Gross Booking Value, or GBV, as the total dollar value of Booking Days booked on our platform, including upfront booking fee (less discounts and credits), value-added fees (i.e., trip protection fees), Guest and Host platform fees, and other charges. GBV includes applicable pass-through taxes and other fees required to be remitted to local authorities, which are excluded from net revenue. GBV is driven by the number of Booking Days and related trip pricing. Revenue from bookings is recognized ratably over the duration of the trip; accordingly, we consider GBV a “leading indicator” of revenue.
| (1) | Refers to calendar quarters (i.e., Q3-22 = July 01 to September 30, 2022). |
| (2) | Booking Days and GBV for bookings ended, excludes cancelled bookings. |
During the three months ended September 30, 2025, Gross Booking Value on the platform totaled approximately $6.23 million, compared to approximately $6.12 million during the three months ended September 30, 2024.
During the six months ended September 30, 2025, Gross Booking Value on the platform totaled approximately $12.70 million, compared to approximately $12.35 million during the six months ended September 30, 2024.
Components of results of operations
Net revenue
During the fiscal year ended March 31, 2022, we began offering a peer-to-peer car sharing platform, which enables Hosts to connect with Guests. We act as an agent under this model and thus, our primary source of revenue is recording revenue from services (on a net basis) for those trips fulfilled by Host vehicles. Prior to August 2021, vehicles available on our platform consisted solely of Company-owned or leased vehicles that we offered for short-term rental or longer-term subscription.
Our revenue for the three and six months ended September 30, 2025, and September 30, 2024, consists of revenue from services and other operating revenue.
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Revenue from Services
Support and facilitation services offered by the Company include services like assistance in execution of a lease agreement, payment facilitation, vehicle delivery, on-road assistance, prospective renter diligence and vehicle usage/location tracking (in cases of loss or theft).
Revenue from services consists of our share of GBV. The fees that are components of GBV are charged as a percentage of the value of certain components of the gross booking value, excluding taxes. Our revenue from services consists of our share of the service fees charged to the Hosts, net of incentives and refunds. We collect these fees from the Guest and share a portion of the booking fee and trip extension with the Host post recovery of our share of facilitation revenue. Daily we, or our third-party payment processors, disburse a portion of the GBV to the Hosts, less the fees due from the Host to us. The amounts charged for the booking fee vary based on factors such as the vehicle type, the day of the week, time of the trip, and the duration of the trip. Revenue is recognized ratably over the trip period as we satisfy our performance obligations.
We also require our Guests to choose one of the three trip protection options. A per-trip amount (included in the booking fee) is charged for trip protection, which is collected upon the booking. We recognize revenue from trip protection charges over the trip completion period.
Recorded revenue from services is reduced by the portion of those incentives and credits paid to our Hosts and Guests that cannot be directly attributable to distinct services performed by the Hosts and Guests. These incentives are treated as contra-revenue and reduce our net Revenue recorded in each period. Those incentive costs that can be attributed to a distinct service (e.g., referral bonuses paid to referrer) are included in sale and marketing expenses.
Others
We exclude from revenue the taxes assessed by governmental authorities that are imposed on specific revenue- producing transactions and collected from customers/subscribers.
Cost of Revenue
Cost of revenue primarily consists of, (1) personnel-related compensation costs of local operations teams and teams that provide phone, email and chat support to users, (2) repair and maintenance expenses of vehicles, (3) payment gateway charges, (4) depreciation of devices for keyless entry system and GPS which are installed in the vehicles of Hosts, (5) software support and maintenance, and (6) other direct expenses. We expect that the cost of revenue will continue to increase on an absolute dollar basis for the foreseeable future to the extent that we continue to see growth on the platform. However, cost of revenue may vary as a percentage of revenue from period to period based on activity on the platform.
Technology and Development
Technology and development expenses primarily consist of personnel-related compensation expenses for technology, product, and engineering teams, as well as expenses associated with our information technology and data science platforms. We expect that our technology and development expenses will increase on an absolute dollar basis but vary from period to period as a percentage of net revenue for the foreseeable future as we continue to invest in technology and development activities relating to ongoing improvements to and maintenance of our platform, including the potential hiring of additional personnel to support these efforts.
Sales and Marketing
Sales and marketing expenses primarily consist of online marketing expenses, marketing promotion expense, marketing partnerships with third parties, sales and marketing personnel compensation expenses and certain incentives and referral bonuses paid to Hosts (reflecting the portion of incentive costs not adjusted against net revenue). Sales and marketing expenses also include allocated overhead. We expect that our sales and marketing expenses will increase on an absolute dollar basis but vary from period to period as a percentage of net revenue for the foreseeable future.
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General and Administrative
General and administrative expenses primarily consist of personnel-related expenses for executive management and administrative functions, including finance and accounting, legal, and human resources. General and administrative expenses also include certain travel expenses, professional service fees, including legal expenses, rent expenses, office expenses, repairs and maintenance of office equipment and furniture, directors’ and officers’ insurance and other expenses. We further expect to continue incurring general and administrative expenses of operating as a public company, including expenses for insurance, costs to comply with the rules and regulations applicable to public companies, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, investor relations, and professional services expenses. We expect general and administrative expenses will reduce on absolute dollar basis owing to our efforts to manage costs.
Finance Costs
Finance costs consist primarily of interest on vehicle loans, finance leases, bridge loan , changes in fair value of Atalaya note, and redeemable promissory note. In addition, it also includes Note issue expenses, bank charges, other borrowing costs.
Other (Income) and Expense, Net
Other expense and (income), net consists primarily of interest income, change in fair value of Atalaya note, Loss on assets written off, Liquidated damages to Investors and Gain on derecognition of subsidiary and other expenses.
Gain on troubled debt restructuring
Gain on troubled debt restructuring consists of gains on account of restructuring of loans from lenders and dues from vendors.
Reversal of previously recognized gain on troubled debt restructuring
Reversal of previously recognized gain on troubled debt restructuring includes the reversal of gains on account of restructuring of vendor dues.
Results of Operations
The following table sets forth our results of operations for the periods presented:
| For the Three Months Ended Sep 30, | For the Six Months Ended Sep 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenue | 2,287,110 | 2,246,897 | 4,599,863 | 4,487,882 | ||||||||||||
| Costs and expenses | ||||||||||||||||
| Cost of revenue | 1,197,289 | 1,213,422 | 2,510,976 | 2,725,711 | ||||||||||||
| Technology and development | 730,090 | 734,920 | 1,439,421 | 1,636,701 | ||||||||||||
| Sales and marketing | 188,560 | 214,770 | 365,523 | 1,017,341 | ||||||||||||
| General and administrative | 2,151,287 | 1,656,036 | 4,025,482 | 4,054,948 | ||||||||||||
| Total costs and expenses | 4,267,226 | 3,819,148 | 8,341,402 | 9,434,701 | ||||||||||||
| Loss from operations | (1,980,116 | ) | (1,572,251 | ) | (3,741,539 | ) | (4,946,819 | ) | ||||||||
| Finance costs | 471,680 | 2,160,178 | 903,813 | 2,320,963 | ||||||||||||
| Gain on troubled debt restructuring | - | (352,447 | ) | (72,912 | ) | (352,447 | ) | |||||||||
| Other income, net | (1,657,647 | ) | (28,007 | ) | 427,002 | (1,031,781 | ||||||||||
| Loss before income taxes | (794,149 | ) | (3,351,975 | ) | (4,999,462 | ) | (5,883,554 | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss | (794,149 | ) | (3,351,975 | ) | (4,999,462 | ) | (5,883,554 | ) | ||||||||
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The following table sets forth our results of operations as a percentage of net revenue:
| For the Three Months Ended Sep 30, | For the Six Months Ended Sep 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
| Costs and expenses | ||||||||||||||||
| Cost of revenue | 52 | % | 54 | % | 55 | % | 61 | % | ||||||||
| Technology and development | 32 | % | 33 | % | 31 | % | 36 | % | ||||||||
| Sales and marketing | 8 | % | 10 | % | 8 | % | 23 | % | ||||||||
| General and administrative | 94 | % | 74 | % | 88 | % | 90 | % | ||||||||
| Total costs and expenses | 187 | % | 170 | % | 181 | % | 210 | % | ||||||||
| Loss from operations | -87 | % | -70 | % | -81 | % | -110 | % | ||||||||
| Finance costs | 21 | % | 96 | % | 20 | % | 52 | % | ||||||||
| Gain on troubled debt restructuring | 0 | % | -16 | % | -2 | % | -8 | % | ||||||||
| Other income, net | -72 | % | -1 | % | 9 | % | -23 | % | ||||||||
| Loss before provision for income taxes | -35 | % | -149 | % | -109 | % | -131 | % | ||||||||
| Provision for income taxes | 0 | % | 0 | % | 0 | % | 0 | % | ||||||||
| Net loss income | -35 | % | -149 | % | -109 | % | -131 | % | ||||||||
Net Revenue
Our total net revenue for the three months ended on September 30, 2025, and September 30, 2024, was $2.29 million and $2.25 million, respectively, representing a marginal increase of $0.04 million, or 2%.
Our total net revenue for the six months ended on September 30, 2025, and September 30, 2024, was $4.60 million and $4.49 million, respectively, representing a marginal increase of $0.11 million, or 2%.
Costs and Expenses
Cost of Revenue
| For
the Three Months Ended Sep 30, | For
the Six Months Ended Sep 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||
| Cost of revenue | 1,197,289 | 1,213,422 | (16,133 | ) | -1 | % | 2,510,976 | 2,725,711 | (214,735 | ) | -8 | % | ||||||||||||||||||||
Cost of revenue was $1.20 million during the three months ended on September 30, 2025, as compared to $1.21 million during the three months ended on September 30, 2024, a decrease of $0.02 million, or 1%.
Cost of revenue was $2.51 million during the six months ended on September 30, 2025, as compared to $2.73 million during the six months ended on September 30, 2024, a decrease of $0.21 million, or 8%. This decrease was driven by overall Company-wide efforts to drive greater operational efficiency. Key drivers of the cost savings include $0.15 million reduction in personnel costs (driven by headcount reductions in India, and discontinuation of operations in Vietnam, Egypt and Indonesia), there were cost savings of $0.10 million on account of depreciation on tracking devices during the six months ended September 30, 2025, as compared to the six months ended September 30, 2024, since majority of the devices were completely depreciated in the previous Fiscal year ending March 31, 2025.
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Technology and Development
| For the Three Months Ended Sep 30, |
For the Six Months Ended Sep 30, |
|||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % Change |
2025 | 2024 | Change | % Change |
|||||||||||||||||||||||||
| Technology and development | 730,090 | 734,920 | (4,830 | ) | -1 | % | 1,439,421 | 1,636,701 | (197,280 | ) | -12 | % | ||||||||||||||||||||
Technology and development expenses totaled $0.73 million during the three months ended on September 30, 2025 and during the three months ended on September 30, 2024 as well.
Technology and development expenses totaled $1.44 million during the six months ended on September 30, 2025, as compared to $1.64 million during the six months ended on September 30, 2024 a decrease of $0.20 million, or 12%. This decrease was driven by employee benefit costs reductions of $0.14 million, and a further reduction of $0.06 million in IT platforms support costs as the Company continues to optimize usage of cloud-based IT services while enabling more in-app features for Guests and Hosts
Sales and Marketing
| For
the Three Months Ended Sep 30, | For
the Six Months Ended Sep 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||
| Sales and marketing | 188,560 | 214,770 | (26,210 | ) | -12 | % | 365,523 | 1,017,341 | (651,818 | ) | -64 | % | ||||||||||||||||||||
Sales and marketing expense totaled $0.19 million during the three months ended on September 30, 2025, as compared to $0.21 million during the three months ended on September 30, 2024, a decrease of $0.03 million, or 12%, primarily driven by personnel-related costs decreased by $0.04 million due to reductions in headcount.
Sales and marketing expense totaled $0.37 million during the six months ended on September 30, 2025, as compared to $1.02 million during the six months ended on September 30, 2024, a decrease of $0.65 million, or 64%, primarily driven by $0.43 million reduction in performance marketing expenses, Personnel-related costs decreased by $0.14 million due to reductions in headcount and $0.08 million reduction in brand marketing.
General and Administrative
| For the Three Months Ended Sep 30, | For the Six Months Ended Sep 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||
| General and administrative | 2,151,287 | 1,656,036 | 495,251 | 30 | % | 4,025,482 | 4,054,948 | (29,466 | ) | -1 | % | |||||||||||||||||||||
General and administrative expenses were $2.15 million during the three months ended on September 30, 2025, as compared to $1.66 million during the three months ended on September 30, 2024, an increase of $0.50 million, or 30%. This increase is primarily due to increase in personnel-related costs by $0.17 million and professional charges increased by $0.31 million due to RSU and Stock Inducement to employees and CEO incurred during the three months ended September 30, 2025.
General and administrative expenses were $4.03 million during the six months ended on September 30, 2025, as compared to $4.05 million during the six months ended on September 30, 2024, a decrease of $0.02 million, or 1%. Legal and professional cost increased by $0.29 million due to Stock inducement awarded to CEO during the six months ended September 30, 2025, this increase is offset by reduction of personal-related costs by $0.19 million despite of RSU issuance cost incurred, due to reduction of headcount during the six months ended September 30, 2025and the rent expense is reduced by $0.11 million pertains to rental towards parking site where Assets held for sale was parked due to sale of Assets held for sale and closure of city office rentals.
Finance Costs
| For
the Three Months Ended Sep 30, | For
the Six Months Ended Sep 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||
| Finance costs | 471,680 | 2,160,178 | (1,688,498 | ) | -78 | % | 903,813 | 2,320,963 | (1,417,150 | ) | -61 | % | ||||||||||||||||||||
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Finance costs were $0.47 million during the three months ended on September 30, 2025, as compared to $2.16 million during the three months ended on September 30, 2024, a reduction of $1.69 million, or 78%. There were Non-cash expenses related to change in Interest on redeemable promissory notes amounting to $1.32 million during the three months ended September 30, 2024 as compared to Nil during the three months ended September 30, 2025 due to repayment of the same during November 2024 financing, Interest on vehicle loans and finance lease has reduced by $0.03 million and $0.06 million respectively and also change in the fair value of Atalaya note has been reduced by $0.25 million during the three months ended September 30, 2025, as compared to three months ending September 30, 2024.
Finance costs were $0.90 million during the six months ended on September 30, 2025, as compared to $2.32 million during the six months ended on September 30, 2024, a reduction of $1.42 million, or 61%. There were Non-cash expenses related to change in Interest on redeemable promissory notes amounting to $1.47 million during the six months ended September 30, 2024 as compared to Nil during the six months ended September 30, 2025 due to repayment of the same during November 2024 financing,
Gain on troubled debt restructuring
| For
the Three Months Ended Sep 30, | For
the Six Months Ended Sep 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||
| Gain on troubled debt restructuring | - | (352,447 | ) | 352,447 | -100 | % | (72,912 | ) | (352,447 | ) | 279,535 | -79 | % | |||||||||||||||||||
Gain on troubled debt restructuring during the three months ended on September 30, 2025 was Nil as compared to $0.35 million during the three months ended on September 30, 2024. The gain on troubled debt restructuring was on account of restructuring of vendor and lender dues.
Gain on troubled debt restructuring during the six months ended on September 30, 2025 was $0.07 million was on account of the gain on troubled debt restructuring of operating lease restructurings as compared to $0.35 million on account of gain on troubled debt restructuring was on account of restructuring of vendor and lender dues during the six months ended on September 30,2025. There is a reduction of $0.28 million or 79% of these gains during the six months ending September 30, 2025 as compared to the six months ending September 30, 2024.
Other expense/(income), net
| For the Three Months Ended Sep 30, | For the Six Months Ended Sep 30, | |||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % Change | 2025 | 2024 | Change | % Change | |||||||||||||||||||||||||
| Other (income) expense, net | (1,657,647 | ) | (28,007 | ) | (1,629,640 | ) | 5819 | % | 427,022 | (1,031,781 | ) | 1,458,803 | -141 | % | ||||||||||||||||||
Other income was $1.66 million during the three months ended on September 30, 2025, versus other income of $0.03 million during the three months ended on September 30, 2024, an increase in income of $1.63 million or 5819%.This increase in income is due to gain on account of derecognition of subsidiary amounting to $1.46 million during the three months ended September 30, 2025.
Other expenses were $0.43 million during the six months ended on September 30, 2025, versus other income of $1.03 million during the six months ended on September 30, 2024, an increase in expenses of $1.46 million or 141%.This increase in expenses is due to recognition of non-cash expenses towards liquidated damages amounting to $ 2.54 million to the investors of December 2024 First Closing and March 2025 Third Closing due to delay in registering of securities with SEC, expenses towards change in the fair value of Atalaya note is $0.27 million during the six months ended September 30, 2025 recorded under finance cost as compared to gain of $0.97 million during six months ended September 30, 2024.This increase in expenses is offset by gain on account of derecognition of subsidiary amounting to $1.86 million during the six months ended September 30, 2025.
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Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the following non-GAAP financial measures help us to evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. We use the following non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes.
We believe that these non-GAAP financial measures, when taken collectively, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial measures to supplement their GAAP results. The non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered as a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP financial measures used by other companies. Because of these limitations, we consider, and you should consider, our non-GAAP financial measures alongside other financial performance measures presented in accordance with GAAP. A reconciliation of each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP is provided below. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.
The following table summarizes our non-GAAP financial measures, along with the most directly comparable GAAP measure, for each period presented below.
| For the Three Months Ended Sep 30, | For the Six Months Ended Sep30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Gross profit | $ | 1,089,821 | $ | 1,033,475 | $ | 2,088,887 | $ | 1,762,171 | ||||||||
| Gross margin | 48 | % | 46 | % | 45 | % | 39 | % | ||||||||
| Contribution profit | 1,197,417 | 1,207,766 | 2,335,841 | 1,666,927 | ||||||||||||
| Contribution margin | 52 | % | 54 | % | 51 | % | 37 | % | ||||||||
| Net (loss) income | (794,149 | ) | (3,351,975 | ) | (4,999,462 | ) | (5,883,554 | ) | ||||||||
| Adjusted EBITDA | $ | (1,260,011 | ) | $ | (1,470,442 | ) | $ | (2,986,006 | ) | $ | (4,731,683 | ) | ||||
Contribution Profit (Loss) and Contribution Margin
We define contribution profit (loss) as our gross profit (loss) plus (a) depreciation expense included in cost of revenue, (b) Stock based compensation included in cost of revenue, (c) other general costs included in cost of revenue (rent, software support, insurance, travel); less (i) Host incentive payments and (ii) marketing and promotional expenses (excluding brand marketing).
We use contribution profit (loss) and contribution margin as indicators of the economic impact of a new booking on our platform, as they capture the direct expenses attributable to a new booking on our platform and the cost required to generate revenue. While certain contribution profit (loss) adjustments may not be non-recurring, non-cash, non-operating, or unusual, contribution profit (loss) is a metric our management and board of directors find useful, and we believe investors may find useful in understanding the costs most directly associated with our revenue-generating activities.
We recorded a contribution profit of $1.20 million during the three months ended on September 30, 2025, versus a contribution profit of $1.21 million during the three months ended on September 30, 2024. Our gross profit improved to $1.09 million during the three months ended on September 30, 2025, versus $1.03 million during the three months ended on September 30, 2024.
We recorded a contribution profit of $2.34 million during the six months ended on September 30, 2025, versus a contribution profit of $1.67 million during the six months ended on September 30, 2024. Our gross profit improved to $2.09 million during the six months ended on September 30, 2025, versus $1.76 million during the six months ended on September 30, 2024, which was driven by reductions in cost of revenue due to the overall improvements in Companywide operational efficiencies accomplished over the past few quarters. In addition, host incentives and marketing costs (excl. brand marketing) were reduced significantly to $0.16 million during the six months ended on September 30, 2025, versus $0.59 million during the same period in 2024, which further contributed to the Company achieving contribution profit as compared to contribution loss in the previous comparable period.
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Contribution profit (loss) and contribution margin are non-GAAP financial measures with certain limitations regarding their usefulness; they should be considered as supplemental in nature and are not meant as substitutes for gross profit /(loss) and gross margin, which are measures prepared in accordance with GAAP. For purposes of calculating the non-GAAP financial measures, we utilize the GAAP financial measure of gross profit (loss), which is defined as revenue minus cost of revenue, each of which is presented in our audited consolidated statements of operations. Our definitions of contribution profit (loss) and contribution margin may differ from the definitions used by other companies in our industry and, therefore, comparability may be limited. In addition, other companies may not publish these or other similar metrics. Further, our definition of contribution profit (loss) does not include the impact of certain expenses that are reflected in our Unaudited Condensed Consolidated Statements of Operations. Thus, our contribution profit (loss) should be considered in addition to, not as a substitute for or in isolation from, gross profit (loss) prepared in accordance with GAAP.
The following tables present reconciliations of gross profit/(loss) to contribution profit/(loss) and gross margin to contribution margin for each of the periods indicated:
Contribution Profit/(Loss)
| For the Three Months Ended Sep 30, | For the Six Months Ended Sep 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net revenue | $ | 2,287,110 | $ | 2,246,897 | $ | 4,599,863 | $ | 4,487,882 | ||||||||
| Cost of revenue | 1,197,289 | 1,213,422 | 2,510,976 | 2,725,711 | ||||||||||||
| Gross profit/(loss) | 1,089,821 | 1,033,475 | 2,088,887 | 1,762,171 | ||||||||||||
| Add: Depreciation and amortization in COR | 22,761 | 74,306 | 45,727 | 149,179 | ||||||||||||
| Add: Stock-based compensation in COR | 34,816 | - | 34,816 | - | ||||||||||||
Add: Overhead costs in COR (rent, software support, insurance, travel) | 139,160 | 145,346 | 326,975 | 350,321 | ||||||||||||
| Less: Host Incentives and Marketing costs (excl. brand marketing) | 89,141 | 45,361 | 160,564 | 594,744 | ||||||||||||
| Less: Host incentives | 34,766 | 30,242 | 77,155 | 77,864 | ||||||||||||
| Less: Marketing costs (excl. brand marketing) | 54,374 | 15,119 | 83,410 | 516,880 | ||||||||||||
| Contribution profit/(loss) | $ | 1,197,417 | $ | 1,207,766 | $ | 2,335,841 | $ | 1,666,927 | ||||||||
| Contribution margin | 52 | % | 54 | % | 51 | % | 37 | % | ||||||||
Adjusted EBITDA is a non-GAAP financial measure that represents our net income or loss adjusted for (i) other income and (expense), net; (ii) depreciation and amortization;(iii) finance costs; (iv) stock based compensation; (v) any other exceptional nonrecurring expenses.
We use adjusted EBITDA in conjunction with net income or loss, its corresponding GAAP measure, as a performance measure that we use to assess our operating performance and operating leverage in our business. The above items are excluded from our adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, or they are not driven by core results of operations, thereby rendering comparisons with prior periods and competitors less meaningful.
We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating the results of our operations, as well as provides a useful measure for period-to-period comparisons of our business performance. Moreover, we have included adjusted EBITDA because it is a key measurement used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting.
Our adjusted EBITDA loss reduced to $1.28 million during the three months ended on September 30, 2025, as compared to an adjusted EBITDA loss of $1.47 million during the three months ended on September 30, 2024. This improvement is a direct result of broad-based cost reduction and optimization initiatives. These initiatives successfully lowered our cost of revenue, technology and development costs, sales and marketing costs, and general and administrative costs (as detailed in the preceding section). It is also notable that this reduction occurred despite incurring an RSU cost of $0.69 million during the three-month period ended September 30, 2025, compared to $ nil expense during the same period in 2024.
Our adjusted EBITDA loss has reduced to $2.99 million during the six months ended on September 30, 2025, as compared to an adjusted EBITDA loss of $4.73 million during the six months ended on September 30, 2024.This improvement is a direct result of broad-based cost reduction and optimization initiatives. These initiatives successfully lowered our cost of revenue, technology and development costs, sales and marketing costs, and general and administrative costs (as detailed in the preceding section). It is also notable that this reduction occurred despite incurring an RSU cost of $0.69 million during the six-month period ended September 30, 2025, compared to $ nil expenses during the same period in 2024.
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Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following:
| ● | Adjusted EBITDA does not reflect other (income)/expense, net, which includes interest income on cash, cash equivalents, restricted cash and investments, net of interest expense, and gains and losses on foreign currency transactions and balances; |
| ● | Adjusted EBITDA excludes certain recurring non-cash charges, such as depreciation of property and equipment and amortization of intangible assets; although these are non-cash charges, the assets being depreciated and amortized may need to be replaced in the future, and adjusted EBITDA does not reflect all cash requirements for such replacements or for new capital expenditure requirements; |
| ● | Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy: and |
| ● | Adjusted EBITDA excludes all finance charges. |
Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results.
The following is a reconciliation of adjusted EBITDA to the most comparable GAAP measure, Net (Loss) / Income:
| For the Three Months Ended Sep 30, | For the Six Months Ended Sep 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net (Loss)/Income | $ | (794,149 | ) | $ | (3,351,975 | ) | $ | (4,999,462 | ) | $ | (5,883,554 | ) | ||||
| Add/(deduct) | ||||||||||||||||
| Stock-based compensation | 685,053 | - | 685,053 | - | ||||||||||||
| Depreciation and amortization | 35,052 | 101,809 | 70,480 | 215,136 | ||||||||||||
| Finance costs | 471,680 | 2,160,178 | 903,813 | 2,320,963 | ||||||||||||
| Other expense/(income), net | (1,657,647 | ) | (28,007 | ) | 427,022 | (1,031,781 | ) | |||||||||
| Gain on troubled debt restructuring | - | (352,447 | ) | (72,912 | ) | (352,447 | ) | |||||||||
| Adjusted EBITDA | (1,260,011 | ) | (1,470,442 | ) | (2,986,006 | ) | (4,731,683 | ) | ||||||||
Liquidity and Capital Resources
During the six months ended on September 30, 2025, and 2024 respectively, we used cash flows from operations of $0.53 million and $ 2.50 million, respectively, reflecting greater operating cost efficiencies and reduced overhead expenditures in 2025. The Company incurred a net loss of $5.00 million and $5.88 million during the six months ended on September 30, 2025, and 2024, respectively, and the accumulated deficit amounts to $338.17 million and $313.44 million as of September 30, 2025, and 2024, respectively.
As of September 30, 2025, our cash and cash equivalents totaled $0.17 million.
Our primary use of cash is to fund our existing operations. If we have sufficient working capital, we will continue to invest in product development and in our technology platform. We expect that our general and administrative expenses will be reduced on an absolute dollar basis due to our efforts to manage cost, use of our cash effectively and improve profitability while managing our research and development programs. As on September 30, 2025, the Company’s cash position was critically deficient and critical payments to the operational and financial creditors of the Company are not being made in the ordinary course of business, all of which raises substantial doubt about the Company’s ability to continue as a going concern.
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In October 2022, we entered into a Business Combination Agreement (BCA) for merger with Innovative International Acquisition Corp. (“IOAC”) In October 2022, we entered into a note purchase agreement with Ananda small business trust, an affiliate of the SPAC sponsor. Ananda small business trust has purchased notes worth $10.00 million. Additionally, pursuant to signing the BCA, the Company has entered into a warrant and convertible note agreement in February 2023 with new investors and raised a total of $21.28 million (before fees) as of August 16, 2023 (which has converted at a discount in the deSPAC). On December 28, 2023, we completed our deSPAC transaction with IOAC and received cash of $5.77 million, assumed liabilities amounting to $21.5 million and unsecured promissory notes of $3.26 million were also assumed.
On June 18, 2024, the Company entered into a securities purchase agreement with certain institutional accredited investors (the “June Aegis Securities Purchase Agreement”) pursuant to which the Company issued and sold an aggregate of $3.60 million in principal amount of notes (the “June Notes”) and warrants to purchase up to an aggregate of 1,267,728 shares (52,966,102 shares prior to Reverse Stock Split) shares of Company Common Stock (the “June Warrants”) for gross proceeds to the Company of $3.00 million. The June Notes are due nine (9) months from the date of issuance, provided that the Company is required to use the proceeds at the closing date of one or more subsequent equity, debt or other capital raise(s) or any sale of tangible or intangible assets with net proceeds sufficient to repay all or any portion of the amounts due under the June Notes, and bear interest at a rate of 15% per annum (up to 20% per annum during the occurrence of an Event of Default). The June Notes are also subject to optional redemption at the option of the Note Holder in the event of a change of control or upon occurrence of an Event of Default (in which case the June Notes are redeemable at a premium of 125% of the amount due thereunder). The June Notes contain certain negative covenants including, but not limited to, a prohibition on incurring indebtedness (other than certain permitted indebtedness) or allowing or suffering to exist any liens or encumbrances (other than permitted liens), repaying or redeeming any outstanding indebtedness other than the June Notes, redeeming or repurchasing any equity interests of the Company, declaring any dividends or distributions, changing the Company’s business, entering into any related party transactions or issuing any securities that would cause a breach or default of the June Notes. The June Notes also contain certain affirmative covenants, including, but not limited to, maintaining good standing, maintaining the Company’s property and intellectual property, maintaining current insurance policies and providing prompt notice in the event of an Event of Default or the commencement of voluntary bankruptcy or liquidation proceedings.
Our future capital requirements will depend on many factors, including, but not limited to, our growth, our ability to attract and retain Hosts and Guests, and the scope of future sales and marketing activities.
The Company expects to continue to incur net losses and have significant cash outflows from operating activities for at least the next 12 months. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, without additional funding, the Company will not have sufficient funds to meet its obligations within one year from the date of the Unaudited Condensed Consolidated Financial Statements were issued. The Company underwent various rounds of financing as described in the “Financing Arrangements” section (see Management’s Discussion and Analysis of Financial Condition and Results of Operations of this form 10-Q), which resulted in the payment of certain outstanding indebtedness, the Company will still need to raise additional capital imminently in order to have sufficient capital. The Company believes that current cash and cash equivalents will allow the Company to continue operations through September 30, 2025, assuming that the Company does not make payment towards its currently outstanding indebtedness and future accruals. The Company was advised by its largest investor and director that he would no longer commit to continuing his support to the Company in the event that any liquidity requirements arise in the future.
There can be no assurance that the Company will be able to achieve its business plan, raise any additional capital or secure the additional financing necessary to implement its current operating plan. The ability of the Company to continue as a going concern is dependent upon its ability to increase its revenues and eventually achieve profitable operations. No adjustments have been made to the financial statements based on this uncertainty.
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Financing Arrangements
We have financed our operations through revenue generated from sales, borrowings, and issuance of Common Stock, preferred stock, senior subordinated convertible promissory notes, convertible promissory note and unsecured convertible notes and redeemable promissory notes.
Debentures and Other Borrowings from Financial Institutions
We have obtained loan facilities from various financial institutions during earlier time periods, which remained outstanding as of September 30, 2025.
Issue of Common Stock
The Company’s shareholders authorized, and the Board of Directors approved for a 1-for-100 Reverse Stock Split, which became effective on October 21, 2024.
The Company’s shareholders authorized, and the Board of Directors approved for a 1-for-20 Reverse Stock Split, which became effective on March 21, 2025.
In December 2023, we raised $5,000,000 against issuance of 16,667 shares (1,666,666 prior to Reverse Stock Split) to Mohan Ananda, the former Chairman of Board of Directors and our largest shareholder.
In May 2024, we issued 125,120 shares (12,512,080 prior to Reverse Stock Split) to Atalaya Note holders to settle a part of the unsecured promissory note liability.
Issue of Unsecured Convertible Note
In December 2023, we issued an Unsecured Convertible Note bearing a principal amount of $8,434,605.
Issue of Redeemable Promissory Note
On June 18, 2024, the Company entered into a Securities Purchase Agreement with certain institutional accredited investors pursuant to which the Company issued and sold an aggregate of $3,600,000 in principal amount of notes and warrants to purchase up to an aggregate of 1,267,728 shares (52,966,102 shares prior to Reverse Stock Split) of Company Common Stock for gross proceeds of $3,000,000. The closing occurred on June 20, 2024.
Private Placement of Equity
On November 5, 2024, the Company entered into a private placement transaction for gross proceeds of $9.15 million (before deduction of fees to the placement agent and other offering expenses payable by the Company). Aegis Capital Corp. acted as the Exclusive Placement Agent for the private placement. The Company intends to use the net proceeds from the private placement to repay approximately $3.80 million of outstanding indebtedness (including accrued interest).
On December 23, 2024, the Company entered into a securities purchase agreement in connection with a private placement offering pursuant to which the Company raised gross proceeds of $5.48 million and after the deduction of fees and expenses payable to the Placement Agent and other offering expenses, including legal fees payable to the Company’s and Placement Agent’s counsel, the net proceeds to the Company was approximately $4.79 million.
On January 31, 2025, the Company entered into a securities purchase agreement, in connection with the second closing of the Offering (the “Second Closing”) pursuant to a Confidential Private Placement Memorandum, dated December 3, 2024. The Securities were offered at a for an aggregate amount of $3 million; provided, however, that the Company did not receive any cash proceeds with respect to Securities with a subscription price of $1.56 million of such amount, as those Securities were issued in consideration for the settlement of litigation with a claimant. The Company received balance net proceeds of approximately $1.25 million after the deduction of fees and expenses payable to the Placement Agent and other offering expenses, including legal fees payable to the Company’s and Placement Agent’s counsel.
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Bridge Note:
On June 23, 2025, the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued Bridge notes for a total principal amount of $402,000 with an initial issue discount of $42,000. The net proceeds disbursed to the Company were $350,000 after deduction of legal and due diligence fees of $10,000. Additionally, $45,500 (i.e., 13% of net proceeds) is due to the placement agent relating to the issuance of these bridge notes which is directly attributable to the loan raised, thereby bringing the total debt issuance costs to $55,500.
On July 31, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued Bridge notes for a total principal amount of $206,225 with an initial issue discount of $23,725. The net proceeds disbursed to the Company were $175,000 after deduction of legal and due diligence fees of $7,500. Hence, the total debt issuance costs amounts to $7,500.
Issue of Convertible Notes
On August 24, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued convertible redeemable notes for a total principal amount of $225,000 with an initial issue discount of $15,000. The net proceeds disbursed to the Company were $201,000 after deduction of legal and due diligence fees of $9,000. Hence, the total debt issuance costs amounts to $9,000.
On August 11, 2025 , the Company entered into Securities Purchase Agreement with certain institutional accredited investor pursuant to which the Company issued Promissory for a total principal amount of $180,000 with an initial issue discount of $18,000. The net proceeds disbursed to the Company were $158,500 after deduction of legal and due diligence fees of $3,500. Hence, the total debt issuance costs amounts to $3,500.
The following table summarizes our cash flows for the periods presented:
| Statements of Cash Flows Data: | For the Years Ended Sep 30, | |||||||
| 2025 | 2024 | |||||||
| Net cash used in provided by operating activities | (533,980 | ) | (2,496,568 | ) | ||||
| Net cash flows (used in)/ generated from investing activities | (360 | ) | 384,825 | |||||
| Net cash generated from financing activities | 368,263 | 1,258,995 | ||||||
| Effect of foreign exchange on cash and cash equivalents. | (833,950 | ) | (29,190 | ) | ||||
| Net decrease in cash and cash equivalents | (166,077 | ) | (852,748 | ) | ||||
Operating Activities
Net cash generated used in operating activities was $0.53 million and $ 2.50 million for the six months ended September 30, 2025, and September 30, 2024, respectively. The major drivers contributing to the decrease of $1.96 million during the current six months compared to previous six months included the following:
| 1. | Decrease in net loss of $2.00 million after adjustments for non-cash items. These adjustments include Depreciation and amortization, fair value changes in financial instruments, interest on redeemable promissory note, gain on troubled debt restructuring, Stock based compensation, Interest on finance leases, Gain on sale and disposal of assets, net, Gain on sale and disposal of assets held for sale, net, Gain on derecognition of subsidiary, Payable to customers and provision written back, Assets written off, Liquidated damages, Host receivable written off and Unrealized foreign currency exchange loss, net ,etc. |
| 2. | Net increase in working capital of $0.04 million was a result of improved working capital management during the six months ended September 30, 2025, as compared to the six months ended September 30, 2024. |
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Investing Activities
Net cash used in investing activities totaled nominal amount of $ 360 for six months ended on September 30, 2025, as compared to cash generated from investing activities amounting to $0.38 million during the same period in 2024. The cash generated during six months ended on September 30, 2024, is largely attributable to receipt of proceeds from maturity of investment in fixed deposits and proceeds from sale of assets held for sale.
Financing Activities
Net cash generated from financing activities totaled $0.37 million and $1.26 million during the six months ended on September 30, 2025, and September 30, 2024, respectively. The Company received net proceeds from the issuance of unsecured notes and convertible notes amounting to $0.48 million and $0.36 million respectively, further the payments include repayment of debt $0.37 million, repayment of unsecured note amounting to $0.04 million and payment towards finance lease amounting to $0.06 million during the six months ended September30, 2025 as compared to higher proceeds from the issuance of redeemable promissory note amounting to $3.00 million, further there are cash outflows towards redeemable promissory note issue expenses amounting to $0.49 million and repayment of Debt amounting to $1.25 million during the six months ended September 30, 2024. As the Company’s cash position decreased, critical payments and debt repayments were not being made in the ordinary course of business.
Contractual Obligations and Commitments
Contractual obligations are cash amounts that we are obligated to pay as part of certain contracts that we have entered into during the normal course of business.
Below is a table that shows our contractual lease obligations as of September 30, 2025:
| Sep 30, 2025 | ||||||||
| Maturities of lease liabilities are as follows: | Operating Leases | Finance Leases | ||||||
| 2026 | 162,334 | 3,022,159 | ||||||
| 2027 | 340,451 | - | ||||||
| 2028 | 357,024 | - | ||||||
| 2029 | 374,427 | - | ||||||
| 2030 | - | - | ||||||
| Total Lease Payments | $ | 1,234,235 | $ | 3,022,159 | ||||
| Less : Imputed Interest | 252,938 | 553,542 | ||||||
| Total Lease Liabilities | $ | 981,297 | $ | 2,468,617 | ||||
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Borrowings
The contractual commitment amounts in the table below are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without a material penalty are not included in the table above.
| As at | Sep 30, 2025 | |||
| Current | ||||
| From Others | ||||
| - Mahindra & Mahindra Financial Services Limited | $ | 366,920 | ||
| - TATA Motors Finance Limited | 1,558,355 | |||
| - Kotak Mahindra Financial Services Limited | 387,362 | |||
| - Orix Leasing and Financial Services India LTD | 6,253 | |||
| - Clix Finance India Private Limited | 69,053 | |||
| - AON Risk Insurance Services West, Inc | - | |||
| $ | 2,387,943 | |||
| Total maturity for the year ending on September 30, 2026 | $ | 2,387,943 | ||
Contingencies
| (A) | Claims filed by customers and third-parties not acknowledged as liability amounted to $4,563,129 and $4,503,122 as at September 30, 2025 and March 31, 2025, respectively. The claims made by the customers against the Company includes claims that have been made for amounts charged to customers by the Company as damages for improper use of vehicles and/or physical damages made to vehicles during an active trip ; or claims made by customers for unavailability of the booked vehicle or for any mechanical default in the booked vehicle ; or claims against any similar issue faced by either the host or the customer. Under the erstwhile business model of the Company , the Company had procured third-party insurance policies for fleet under its management which indemnifies against personal death and/or injuries suffered either by the customer or third-parties during the use of its vehicles. Based on the insurance coverage, the Company is confident that liability, if any, arising from the claims under the previous business model will be covered by the insurance. Further, under the current business model of the Company, wherein the Company acts only as a facilitator, any issues arising from breach of any terms including improper use of vehicles and/or physical damages made to the vehicles or any mechanical issues in the vehicle will be the responsibility of either the host or the customer. While uncertainties are inherent in the final outcome of these matters, the Company believes that the disposition of these proceedings will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
| (B) | The Company has received various orders and show cause notices from Indian indirect tax authorities relating to disputes on input tax credits, service tax liabilities, GST dues, and taxability of car rental revenue for periods between 2014 and 2023, totaling $9,469,331 (March 31, 2025: $9,514,651). These disputes include disallowance of input credits, service tax liabilities on booking fees and penalty charges, disputes on goods and service tax input availed, and GST demands on gross booking value. The Company has taken necessary steps, including filing appeals, submissions, and deposits, and is awaiting further communication from the authorities. In relation to the GST demands on gross booking value, the Company has filed a writ petition with various authorities challenging the order. Based on the submissions provided and documents available, management believes that no significant outflow is expected, and therefore, no provision has been recorded as of September 30, 2025 and March 31, 2025. |
| (C) | In February 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru against Zoomcar India, Zoomcar, Inc. and Zoomcar Holdings, Inc. (formerly IOAC) challenging his termination, claiming damages amounting to $382,445 and claiming that 100,000 options to purchase shares of Zoomcar, Inc. have vested. On March 3, 2023, the City Civil and Sessions Judge at Mayo Hall, Bengaluru, issued an interim injunction to restrain each of Zoomcar, Inc. and Zoomcar Holdings, Inc. from “alienating or dealing” the 100,000 shares of Zoomcar, Inc. claimed by the former employee while the suit is pending. Zoomcar believes that such claims are baseless and is attempting to have the interim order vacated. In addition, Zoomcar India filed an application in the former employee’s suit, seeking that Zoomcar Holdings, Inc. be deleted from the array of parties in the suit. |
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| (D) | On November 1, 2024, Gregory Moran, a former employee of Zoomcar India, has filed a case with the Superior Court, Delaware, challenging his termination without a cause or a sufficient notice, claiming $100,000 payment that was agreed to be paid on the 6 month anniversary of the effective date of closing of the SPAC transaction along with a 8% fully diluted equity interest in Zoomcar Holdings, Inc., non-payment of “vacation” valued at approximately $30,000, leave encashment of approximately $42,000, $96,000 entitled to him for severance pay and gratuity as per India's Payment of Gratuity Act, 1972. Additionally, he has claimed 210,520 stock units already existing, fully vested. The Company filed a motion to dismiss the matter on November 27, 2024. On January 7, 2025, the Company subsequently filed the opening brief in support of the motion to dismiss filed on November 27, 2024. The Company further filed the opening brief in support of the motion to dismiss on 7 January 2025. Mr. Moran filed opposition to Zoomcar’s motion on February 5, 2025 and Zoomcar filed a reply in further support of its motion on February 20, 2025. Oral arguments on Zoomcar’s motion to dismiss were heard on April 29, 2025. The court granted the motion to dismiss Mr. Moran’s quasi-contractual claims and reserved decision on the balance of the motion in the next hearing held on August 15, 2025. The judgement from the hearing is currently pending with the Court. |
| (E) | Zoomcar Holdings, Inc. files tax returns in the U.S. federal, various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination by tax authorities. Our major tax jurisdiction is in India. The Indian tax authority is currently examining our 2016 through 2023 tax returns. There are other ongoing audits in various other jurisdictions that are not material to our financial statements. The Company received an order for fiscal year 2015-16 in relation to non-deduction of tax deducted at source withholding taxes on certain payments to resident payees/service providers amounting to $121,218 (March 31, 2025: $125,839). Penalty of $125,442 has been claimed but the proceedings are kept under abeyance until the above order is disposed off. The Company has filed appeals against the above orders before higher authority. The Company has not recognized any uncertain tax position as at September 30, 2025 and March 31, 2025, respectively. The Company believes these orders are unlikely to be sustained at the higher appellate authorities. |
| (F) | On August 2025, the Company received a notice from the legal representatives of certain holders of warrants to purchase Series E Preferred Stock of Zoomcar, Inc. pursuant to the warrant agreement dated May 12, 2021. The warrant holders have raised a dispute regarding the non-delivery of shares following the submission of their respective notices of exercise. The warrant holders are collectively entitled to warrants amounting to $6,217,614. The Company believes that such claims are without merit and is in discussion with the legal representatives to dismiss the same. |
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Critical Accounting Policies and Estimates
The Company prepared its financial statements in accordance with GAAP. Our preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, and related disclosures at the date of the financial statements, as well as revenue and expense recorded during the reporting periods. The Company evaluates our estimates and judgments on an ongoing basis.
The Company bases its estimates on historical experience and/or other relevant assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ materially from management’s estimates.
See Note 2, Summary of Significant Accounting Policies, to our Unaudited Condensed Consolidated Financial Statements for further information related to our critical accounting policies and estimates, which are as follows:
Debt
The debt instruments of the Company consist of debentures and term loans from financial institutions. The Company based on available proceeds makes periodic prepayments of scheduled instalments and the same has been accounted for under ASC 470-50.
Unsecured Notes
During the six months ended September 30, 2025, the Company has issued Bridge Notes which are repayable at the principal value along with an interest of 12% p.a. on the maturity date and has been accounted for under ASC 470-10. The Company issued these Bridge Notes at discount and incurred expenses on the issue of these Notes. As per ASC 835, the discount and the expenses incurred on issue of the Bridge Notes have been amortized over the contractual period using the effective interest method. The Bridge Notes liabilities have been presented net off the discount and issue expenses.
Convertible Notes
During the six months ended September 30, 2025, the Company has issued Convertible Notes which are repayable at the principal value along with an interest of 6-12% p.a. on the maturity date or the holder as an option to convert those in variable number of equity shares and the same has been accounted for as a share settled debt under ASC 480-10. The Company issued these Convertible Notes at discount and incurred expenses on the issue of these Convertible Notes. As per ASC 835, the discount and the expenses incurred on issue of the Convertible Notes have been amortized over the contractual period using the effective interest method. The Convertible Notes liabilities have been presented net off the discount and issue expenses.
Issuance costs on Debt
Debt issuance costs consist primarily of initial discount provided, arrangement fees paid to placement agent, professional fees and legal fees. These costs are netted off with the related debt and are being amortized to interest expense over the term of the related.
The debt has been classified into current or non-current based on the payment terms of the debt instruments. Non-current obligations are those scheduled to mature beyond twelve months from the date of the Company’s Condensed Consolidated Balance Sheets.
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Warrants
When the Company issues warrants, it evaluates the balance sheet classification of the warrant to determine whether the warrant should be classified as equity or as a derivative liability on the Condensed Consolidated Balance Sheets. In accordance with ASC 815- 40, Derivatives and Hedging- Contracts in the Entity’s Own Equity (ASC 815-40), the Company classifies a warrant as equity so long as it is “indexed to the Company’s equity” and several specific conditions for equity classification are met. A warrant is not considered indexed to the Company’s equity, in general, when it contains certain types of exercise contingencies or adjustments to exercise price. If a warrant is not indexed to the Company’s equity or it has net cash settlement that results in the warrants to be accounted for under ASC 480, Distinguishing Liabilities from Equity, or ASC 815-40, it is classified as a derivative liability which is carried on the Condensed Consolidated Balance Sheets at fair value with any changes in its fair value recognized currently in the Condensed Consolidated Statements of Operations.
| (a) | Warrants issued towards the November 2024 and December 2024 offering: |
During the year ended March 31, 2025, the Company issued shares of Common Stock, pre-funded, Series A and Series B warrants in the November 2024 and December 2024 offering and as consideration to the placement agents for the issuance. The Common stock and pre-funded warrants were classified as equity in accordance with ASC 815-40. The Series A warrants and Series B warrants were initially classified as derivative financial instruments in accordance with ASC 815-10-15-83.
Subsequently, during the year ended March 31, 2025, the variability in number of warrants exercisable towards Series A and Series B of both the November 2024 and December 2024 offering was fixed in accordance with agreement. Hence, as per ASC 815-10, the outstanding Series A Series B warrants for both November 2024 and December 2024 offering have been reclassified to equity at the reclassification date fair value.
Warrants exercised before the reclassification have been reclassified at their respective exercise date fair value and warrants exercised after the reclassification were adjusted with additional paid in capital.
| (b) | Warrants issued along with Redeemable Promissory Note: |
During the year ended March 31, 2025, the Company issued warrants along with Redeemable Promissory Note and as consideration to the placement agent for the issuance of the Redeemable Promissory Note. These warrants were classified as equity in accordance with ASC 815-40 on the initial recognition.
Fair value measurements and financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with ASC 820, Fair Value Measurement (“ASC 820”), the Company uses the fair value hierarchy, which prioritizes the inputs used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are set forth below:
| Level 1 | Observable inputs such as quoted prices in active markets for identical assets or liabilities. | |
| Level 2 | Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active or inputs other than the quoted prices that are observable either directly or indirectly for the full term of assets or liabilities. | |
| Level 3 | Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities. |
During the six months ended September 30, 2025, the Company’s primary financial instruments included cash and cash equivalents, investments, accounts receivables, other financial assets, accounts payable, debt, unsecured convertible note and other financial liabilities. The estimated fair value of cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to short-term maturities of these instruments.
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Troubled debt restructuring
As per ASC 470-60 Troubled Debt Restructuring (TDR) refers to a situation where the creditor, grants concessions to a borrower experiencing financial difficulties. These concessions may include modifications to the terms of the payable, such as reducing the interest rate, extending the repayment period, or forgiving a portion of the payable. Such restructuring is done with the intent to provide relief to the borrower and to maximize the potential for payable recovery by the Company.
In accordance with ASC 470-60, when the total future cash payments under the new terms are less than the carrying amount of the payable at the date of restructuring, the difference between the carrying amount and the total future cash payments is recognized as a ‘Gain on Troubled Debt Restructuring’ in the Condensed Consolidated Financial Statements. This gain is recorded immediately in the period the restructuring occurs.
If the total future cash payments under the new terms exceed the carrying amount of the payable at the date of restructuring, no adjustment to the carrying amount of the payable is made. Instead, the company calculates a New Effective Interest Rate (EIR) based on the revised terms of the restructured payable. The debt is then amortized over the remaining life of the payable using the new EIR, with interest expense recognized based on this rate in future periods.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting described below. In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the Unaudited Condensed Consolidated Financial Statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cashflows for the periods presented in conformity with GAAP.
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Material Weaknesses in Internal Control over Financial Reporting
Controls and Procedures — Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the degree of compliance with policies or procedures may deteriorate.
Management conducted, under the supervision of our Principal Executive Officer and Principal Financial Officer, an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as the “COSO” criteria. Based on the assessment performed as of March 31, 2025, in our Annual Report on Form 10-K filed on June 30, 2025, we identified five material weaknesses in our internal control over financial reporting, which remained unremediated as of September 30, 2025, related to:
| (i) | Our controls over independent review and documentation of third-party advisors’ reports were not operating effectively. We rely on third-party advisors for assistance with the preparation of key schedules and financial statements. However, we failed to establish a consistent process for independently reviewing these third-party advisor documents before incorporating them into our financial statements. |
| (ii) | Our controls over financial reporting, specifically related to the inadequacy of our financial reporting policies and procedures, were not operating effectively. The Company lacks financial reporting policies and procedures that are commensurate with GAAP and SEC reporting requirements. |
| (iii) | Our controls over the financial statement close process do not provide sufficient evidence of review. |
| (iv) | Our resources are deficient in comprehensive knowledge and expertise pertaining to technical accounting and SEC reporting requirements. |
| (v) | Our controls were not adequately designed to provide sufficient documentation and review of the operating effectiveness of Information Technology General Controls (ITGC’) for information systems that are relevant to the preparation of the Company’s consolidated financials. Specifically, our user access controls were not adequately designed or implemented and our monitoring of ITGC controls was insufficient. |
Based on the assessment performed, as of March 31, 2025, our management concluded that the internal control over financial reporting was ineffective.
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Changes in Internal Control over Financial Reporting
We are taking actions to remediate the material weaknesses relating to our internal control over financial reporting, as described above. Except as otherwise described herein, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Remediation Plans
We have commenced measures to remediate the identified material weaknesses, including:
| (i) | We have been working with consultants to assist in the preparation and presentation of financial statements in accordance with US GAAP and PCAOB guidelines. Furthermore, we are putting a framework in place to properly manage the review and approval process of work prepared by our third-party advisors. |
| (ii) | We will work on scheduling training sessions on a quarterly basis to provide relevant USGAAP knowledge. In addition to this management would look to hire people with USGAAP knowledge to bridge the gap over the next few quarters. |
| (iii) | Management will be finalizing work commenced on developing accounting manuals, policies, and standard operating procedures in consultation with Deloitte, our external SOX consultants. |
| (iv) | We are designing and implementing additional review procedures within our accounting and finance department to provide more robust and comprehensive internal controls over financial reporting. |
| (v) | We have properly concluded that ITGC controls over SAP (our accounting software) are operating effectively as of March 31, 2025. We are in the midst of reviewing and implementing proper ITGC controls in all other areas relevant to the preparation of the Company’s financial statements. |
We intend to continue to take steps to remediate the material weaknesses described above and further evolving our accounting processes. The actions we are taking are subject to ongoing executive management review and are also subject to the oversight of the Audit Committee. We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time. If we are unable to successfully remediate these material weaknesses, or if in the future, we identify further material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our Unaudited Condensed Consolidated Financial Statements may be materially misstated.
This Quarterly Report on Form 10-Q does not include an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012.
Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Except as described below, we are not currently subject to any material claims, lawsuits, arbitration proceedings, administrative actions, government investigations and other legal and regulatory disputes and proceedings (collectively, “Legal Proceedings”) and we are not subject to any pending Legal Proceedings in any of the jurisdictions where we operate other than in India.
We may become subject to other Legal Proceedings over time or from time to time, in the ordinary course of our business and as our business continues to grow and expand over time. Becoming involved with Legal Proceedings, regardless of the outcome, may result in substantial cost and diversion of our resources, including our management’s time and attention.
As a result of our business operations in India, we are regularly subject to legal proceedings, many of which are de minimis in nature and amount and the majority of which relate to local tax matters. Many of these tax and vehicle accident-related Legal Proceedings are pending before various forums in India and involve localized practices and interpretations of regulatory matters that make the ultimate outcomes or resolution of these Legal Proceedings inherently uncertain and difficult to predict. Management’s views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop.
Litigation with Former Employee
In February 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru against Zoomcar India, Zoomcar and IOAC challenging his termination, claiming approximately $400,000 in damages, and claiming that 100,000 options to purchase shares of Zoomcar have vested. On March 3, 2023, the City Civil and Sessions Judge at Mayo Hall, Bengaluru, issued an interim injunction to restrain each of Zoomcar and IOAC from “alienating or dealing” the 100,000 shares, (without giving effect to the reverse splits and the conversion ratio for the business combination), of Zoomcar claimed by the former employee while the suit is pending. Zoomcar believes that such claims are baseless and is attempting to have the interim order vacated. In addition, Zoomcar India filed an application in the former employee’s suit, seeking that IOAC be deleted from the array of parties in the suit, inter alia since (i) IOAC is neither a necessary nor a proper party to the suit; (ii) no reliefs have been sought by the former employee from IOAC; and (iii) there is no cause of action against IOAC. For more information see the section entitled herein “Risk Factors — A former employee of Zoomcar India has instituted a wrongful termination suit and claims that certain Zoomcar options have vested”
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Litigation with the Founder and Former CEO
On September 26, 2024, we received a copy of a complaint filed with the United States District Court for the District of Delaware wherein our founder and former CEO Greg Moran has challenged the Company’s termination of his employment for cause, effective as of June 18, 2024. Mr. Moran has contested the facts leading up to the grounds on which his termination was based and has also claimed that this alleged wrongful termination has deprived him of his vested right to 8% of the Company’s outstanding equity that he claims was owed to him under his Employment Agreement. He has also claimed that in connection with his termination he is entitled to the payment of certain amounts for unused paid leave during his employment with Zoomcar, along with certain other compensation he claims to be owed under the terms of his Employment Agreement, including “Owed Severance” equal to approximately $72,000. In total, Mr. Moran seeks damages of at least $238,000 plus damages associated with the 8% of shares. He also seeks damages under the New York Labor Law, under which he seeks liquidated damages equal to 100% of any unpaid wages. He claims that all of the above constitute wages under New York Labor Law.
Zoomcar believes that the termination of Mr. Moran’s employment for cause was proper in accordance with the terms of his Employment Agreement. Mr. Moran’s case in the District Court was dismissed on account of Mr. Moran’s stated intention to refile the case in Delaware Superior Court. Mr. Moran refiled his lawsuit in the Superior Court of the State of Delaware on November 1, 2024. On November 27, 2024, the Company filed a motion to dismiss certain of the causes of action for failure to state a cause of action, and the briefing on that motion was filed on January 7, 2025. Mr. Moran filed opposition to Zoomcar’s motion on February 5, 2025 and Zoomcar filed a reply in further support of its motion on February 20, 2025. Zoomcar’s oral arguments in its motion to dismiss were heard on April 29, 2025. The Court has requested additional briefing with respect to the Company’s motion to dismiss Mr. Moran’s Wage claim. The additional briefing is due on August 15, 2025. The court granted the motion to dismiss Mr. Moran’s quasi-contractual claims and reserved decision on the balance of the motion. Zoomcar believes the allegations are without merit, intends to defend them vigorously and expects to prevail either at the motion stage or at a hearing on the merits. For more information see the section herein titled “Risk-Factors — The founder and former CEO of the Company has initiated a civil complaint against the Company contesting the reasons for his termination and has raised certain other claims with regards to his ownership of the Company and compensation for termination of his employment.”
Litigation with ACM
The Company received two default notices from ACM. The first notice was issued on May 22, 2024 which stated that the Company is in default of the terms of the Unsecured Convertible Note issued to ACM on December 28, 2023, since the Company had entered into an equity line arrangement with White Lion Capital LLC, a variable rate transaction, without the prior consent of ACM. Further, on June 25, 2024, the Company received the second notice of default from ACM stating that the Company has incurred indebtedness in the form of $3,600,000 in principal amount of notes in a transaction involving Aegis Capital Corp. acting as the placement agent, prior to which, the consent of ACM was not obtained. As per the terms of the ACM note, in the event of any default, all accrued but unpaid interest plus liquidated damages and other amounts thereof, shall become immediately due and payable in cash. On November 7, 2024, ACM filed a notice of motion for summary judgement in in lieu of complaint against Zoomcar in New York courts for accelerated payment of $5,997,832.72 due under the ACM note and related legal expenses, pursuant to breach of the terms of the note. ACM alleged that two “Events of Default” (as defined in the Note) had occurred thereby entitling ACM to full and accelerated payment of the Note. The first was a Form 8-K, filed by Zoomcar on May 9, 2024, which allegedly disclosed that on May 6, 2024, Zoomcar had entered into an equity line arrangement and “Variable Rate Transaction” (as defined in the Note) with White Lion Capital LLC (“White Lion”). The second was a Form 8-K, filed by Zoomcar on June 21, 2024, which allegedly disclosed that on June 18, 2024, Zoomcar had incurred a form of debt that was not “Excluded Debt” (as defined in the Note) arising from its placement agent agreement with Aegis Capital Corp. without ACM’s prior consent. The Note generally provides that, upon the occurrence of an Event of Default, all accrued but unpaid interest plus liquidated damages and other amounts thereof shall become immediately due and payable to the Note holder. On January 14, 2025, Zoomcar filed opposition to the Motion. In relevant part, Zoomcar challenged the fact allegations concerning: (i) the first Form 8-K by tendering to the Court evidence confirming that the subject transaction with White Lion in fact had been terminated and the underlying filing of a Form S-1 registration statement contemplated in that transaction was never effectuated; and (ii) the second Form 8-K by tendering to the Court evidence confirming that the subject transaction involved Excluded Debt. The effect of the foregoing is the transactions were excluded from the definitions of Events of Default and extinguished ACM’s alleged entitlement to accelerated payment under the Note. Additional defenses were also presented by Zoomcar to the Motion. On March 28, 2025, New York County Supreme Court Justice granted a summary judgment in favor of ACM in the amount of $5,656,086.72, as well as default interest in the amount of $346,481.00, post-judgment interest at the statutory rate, attorneys’ fees, and costs. The issue of attorneys’ fees was referred to a special referee to report and recommend on submission from the parties. On April 22, 2025, the Company filed a Notice of Appeal seeking to reverse the March 28, 2025, order granting summary judgment in favor of ACM. On May 9, 2025, the Court reduced the award of attorneys’ fees and costs to $12,000.00. Based on the foregoing, on July 1, 2025, the Clerk of the Court entered two (2) money judgments against the Company for the underlying liability and attorneys’ fees: $5,997,832.72 and $12,000.00. On July 29, 2025, the Company filed Notices of Appeal seeking to reverse both money judgments in favor of ACM. The Company will continue to vigorously prosecute its appeals. . For more information see the section herein titled “Risk Factors — ACM has filed a notice of motion for summary judgement in lieu of complaint against Zoomcar in New York courts for payment of amounts due under the Note pursuant to breach of the terms of a note.”
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Litigation with Prior Placement Agent
On March 14, 2025, the Company received a demand letter (the “Demand Letter”) from the attorneys for the placement agent (the “Prior Placement Agent”), with which the Company had entered into an engagement agreement on or about May 23, 2024 (the “Prior Placement Agreement”). A claim has been made, pursuant to the terms of the Prior Placement Agreement, for the payment of cash fees and the issuance of warrants to the Prior Placement Agent, as and for “tail fees” owed in connection with any financings within 18 months after the expiration or termination of the Prior Placement Agreement. The claims are made with respect to the sales of securities in the offerings closed by the Company in June 2024, November 2024, December 2024 and February 2025. The demand is for 7% of the aggregate gross proceeds received by the Company in each of those offerings from investors on a “tail list” provided by the Prior Placement Agent and warrants to purchase up to 7% of the aggregate number of shares of common stock issued in each of the offerings to investors on the “tail list,” which warrants are to have the same terms and warrants offered to investors in each of the offerings, with an exercise price equal to 125% of the applicable offering price.
With respect to the offering closed in June 2024, the claim is made with respect to one investor claimed to be on the “tail list,” for a cash fee of 7% of the aggregate gross proceeds received from such investor and 7% warrant coverage, with respect to that investor, but no specific amount is claimed. With respect to the offering closed in November 2024, there is a claim for a cash fee of $77,000 and warrants to purchase an aggregate of 17,900 shares of common stock at an exercise price of $107 per share, for the same investor.” With respect to the offering closed in December 2024, there is a claim for a cash fee of 7% of the aggregate gross proceeds received from the same investor and 7% warrant coverage, with respect to that investor, but no specific amount is claimed. A similar claim was also made to the extent that such investor participated in the offering closed in February 2025.
The Company has taken necessary financial provisions of $202,999 as recorded in the “Other expense/(income), net” in the Unaudited Condensed Consolidated Financial Statements for the six months ending on September 30, 2025.
Other Matters
Zoomcar utilizes a set of Terms and Conditions (“T&Cs”) tailored specifically for each of the jurisdictions in which we operate which includes privacy policy, platform use policy, terms and conditions for Host and Guest. These T&Cs are in the form of a clickwrap agreement which lays down the duties, risks, and the liabilities of Zoomcar, Hosts and the Guests in relation to use of services rendered by Zoomcar through its Platform. These T&Cs inter alia cover the eligibility criteria for listing/leasing of vehicles, facilitation of booking, cancellation and incident reporting via the platform, processing of payments/refunds etc. and they further lay out the risks, rights and obligations of the Hosts and the Guests with respect to handling of the vehicles, responsibility for damage, accident, traffic violations and/or for any incidents in violation of applicable law.
In addition to the T&Cs, due to regulatory requirements in India, an additional lease agreement is executed between the Host and the Guest which encompasses the allocation of risks and responsibilities of the Hosts and Guests with respect to listing and use of the relevant vehicle. The execution of such lease agreement is facilitated through the Zoomcar Platform in the form of a clickwrap agreement.
Given that Zoomcar operates as a peer-to-peer carsharing marketplace which facilitates sharing of vehicles between the Hosts and Guests through its platform, the responsibility and liability of Zoomcar under the T&Cs is limited to being a facilitator of such transaction and the obligations for liabilities arising out of listing and/or use of the vehicle booked through the platform is on the Guests and the Hosts. The use of the Zoomcar platform and sharing of vehicle through the platform is undertaken by the Host and Guests entirely at their own risk. Zoomcar’s liability is further capped under the T&Cs at approximately $120 (across all jurisdictions) for any claims arising out of the use of Zoomcar platform. However, Zoomcar, as part of the facilitation services to Hosts and Guests, also provides for trip-based vehicle protection whereby Zoomcar collects and pools the “value-add” damage coverage fee to be applied to the costs of repairs or other damage or loss of vehicle in the event a Host vehicle is involved in an incident, such as an accident, during a trip and this value-add trip protection fee pool may not always help set off the damage claims. Therefore, Zoomcar often remains at a risk of residual claims that it may have to absorb in absence of a third-party insurance. See the section titled “Risk Factors - Insurance Risks Related to Our Business,” as our business is subject to certain risks in absence of third-party insurance cover that could have a material impact on our business.
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Item 1A. Risk Factors
An investment in our securities involves a high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our securities could decline due to any of these risks, and, as a result, you may lose all or part of your investment.
In the course of conducting our business operations, we are exposed to a variety of risks. Any of the risk factors we describe below have affected or could materially adversely affect our business, financial condition, and results of operations. The market price of our securities could decline, possibly significantly or permanently, if one or more of these risks and uncertainties occur. Certain statements in “Risk Factors” are forward-looking statements. See “Special Note Regarding Forward-Looking Statements.”
Risk Factors Summary
Our business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors” immediately following this risk factors summary, that represent challenges that we face in connection with the successful implementation of our strategy and the growth of our business. Our business, prospects, financial condition or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of shares of our Common Stock or Public Warrants and result in a loss of all or a portion of your investment.
Any of the risk factors we describe below have affected or could materially adversely affect our business, financial condition and results of operations. The market price of our securities could decline, possibly significantly or permanently, if one or more of these risks and uncertainties occurs:
| ● | We have a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise funds imminently to finance operations and as a result there is substantial doubt about our ability to continue as a going concern; |
| ● | Our Common Stock is quoted on an OTC Markets Group trading platform, the OTCQB, instead of a national exchange or quotation system. Accordingly, our investors may experience significant volatility in the market price of our Common Stock and have difficulty selling their shares. |
| ● | Because our Common Stock is quoted on the OTCQB and not listed on a national exchange, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because it may be considered a penny stock and thus be subject to the penny stock rules. |
| ● | Failure to comply with the continued qualification standards within, and any removal from OTCQB could materially and adversely affect the liquidity and market price of our common stock and our access to capital. |
| ● | Our current business model’s limited operating history and financial results make our future results, prospects, and the risks we may encounter difficult to predict. |
| ● | In addition to our defaults under current indebtedness described elsewhere here, certain of our debt financing arrangements are currently in default and we have delayed certain other payments to lenders, which may restrict our current and future business and operations; | |
| ● | We require additional capital to support current operations and will require additional capital to support the growth of our business, which may not be available on terms acceptable to us, or at all. | |
| ● | Future sales of our securities may affect the market price of the Common Stock and result in material dilution, including the anti-dilution protection in the warrants issued in 2024. We are also in default of various outstanding debt obligations, including under the Notes issued to ACM, and may issue shares of Common Stock or other securities to satisfy those obligations in the future (in the case of ACM, subject to receipt of shareholder approval). The issuance of shares of Common Stock or other securities in the future will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock. |
| ● | Our operating and financial forecasts are subject to various known and unknown contingencies and factors outside of our control and may not prove accurate, and we may not achieve results consistent with management’s expectations; | |
| ● | We have issued a significant number of warrants and exercise of these securities and the sale of the shares of Common Stock issuable thereunder (along with the issuance of any similar securities in the future,) will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock. |
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| ● | The market for online platforms for peer-to-peer car sharing is relatively new and rapidly evolving. If we fail to successfully adapt to developments in our market, or if peer-to-peer car sharing online platforms do not achieve general acceptance, it could adversely affect our business, financial condition and operating results; |
| ● | If we do not retain existing Hosts, or attract and maintain new Hosts, or if Hosts fail to provide an adequate supply of high-quality vehicles, our business, financial condition, and results of operations may be negatively impacted; | |
| ● | If we fail to retain existing Guests, or attract and maintain new Guests, our business, financial condition, and results of operations may be negatively impacted; | |
| ● | If we are unable to introduce new or upgraded platform features that Hosts or Guests recognize as valuable, we may fail to retain and attract such users to our platform and our operating results would be adversely affected; |
| ● | Our success depends upon our ability to maintain favorable customer reviews and ratings, and if our reputation suffers, our business, financial condition and operating results may be adversely affected; |
| ● | Maintaining and enhancing our brand and reputation is critical to our business prospects. While we have taken significant steps to build and improve our brand and reputation, failure to maintain or enhance our brand and reputation will cause our business to suffer; |
| ● | Breaches and other types of security incidents of our networks or systems similar to the recent Cybersecurity Incident, or those of our third-party service providers, could negatively impact our business, our brand and reputation, our ability to retain existing Hosts and Guests and attract new Hosts and Guests, may cause us to incur significant liabilities and adversely affect our business, results of operations, financial condition, and future prospects; |
| ● | Our business depends on attracting and retaining capable management, technology development and operating personnel; |
| ● | We may be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures; |
| ● | We are in the process of remediating identified material weaknesses in our internal controls and if we fail to remediate these weaknesses or if we experience additional material weakness in the future, or otherwise fail to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act, we may not be able to accurately or timely report our financial condition or results of operations, or comply with the accounting and reporting requirements applicable to public companies, which may adversely affect investor confidence in the Company and the market price of our stock; |
| ● | Geographic areas in which Zoomcar operates and plans to operate in the future have been and may continue to be subject to political and economic instability; |
| ● | We may incur liability for the activities of Hosts or Guests which could harm our reputation, increase our operating costs, and adversely affect our business, financial condition, and operating results.; |
| ● | Our business operations may result in losses for which we are not insured; | |
| ● | Members of our management team have limited or no prior experience managing a public company; | |
| ● | As a public company, we have incurred and expect to continue to incur increased expenses associated with the costs of being a public company. | |
| ● | We are the subject of litigation and may not have the ability or the cash to successfully defend such litigation that has been and may in the future be brought against us; | |
| ● | We are an “emerging growth company” within the meaning of the Securities Act, and, if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors; | |
| ● | Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for the Common Stock to decline; |
| ● | The requirements of being a public company may strain our resources, divert our management’s attention, and affect our ability to attract and retain qualified independent board members; |
| ● | Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition; and |
| ● | Natural disasters, including and not limited to unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt our business schedule. |
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Risks related to our Financial Condition
We have a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise additional funds imminently to finance operations and as a result there is substantial doubt about our ability to continue as a going concern.
We have a history of operating losses and expect to continue incurring operating losses in the foreseeable future as we continue to develop our current business model and enhance our platform offerings. We also have indebtedness that is in default in excess of our current capital resources (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in this Quarterly Report on Form 10-Q for the six months ended September30, 2025). On June 18, 2024, the Company entered into a securities purchase agreement with certain institutional accredited investors (the “June Aegis Securities Purchase Agreement”) pursuant to which the Company issued and sold an aggregate of $3,600,000 in principal amount of notes (the “June Notes”) and warrants to purchase up to an aggregate of 1,267,728 shares of Common Stock (which takes into account an adjustment following the Company’s Share Combination Event that was effective on October 22, 2024, but not reflecting the Reverse Stock Splits) (the “June Warrants”) for gross proceeds of $3,000,000.
Additionally, on November 7, 2024, the Company closed the November 7 Placement for gross proceeds of $9.15 million (including $2.5 million of which was provided by one of the Company’s directors) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent in the November 7 Placement. At closing of the November 7 Placement, the Company issued an aggregate of 2,137,850 units at a price of $4.28 per unit, each unit consisting of one share of Common Stock (or pre-funded warrant in lieu thereof), two November Series A Warrants (as hereinafter defined) each to purchase one share of Common Stock and a November Series B Warrant (as hereinafter defined) to purchase such number of shares of Common Stock, as determined on the November Reset Date, which does not reflect the Second Reverse Split. As a result of the November 7 Placement, the Company received $3.62 million of cash and cash equivalents after giving effect to offering fees and expenses, the payment of $3.8 million to the holders of the Company’s June 2024 notes and a holdback of $0.2 million for indemnification of the Placement Agent as described in more detail herein.
Further, on December 24, 2024, the Company held the First Closing of this Offering for gross proceeds of $5,484,843 (including $50,000 of which was provided by the Company’s former Chief Executive Officer i.e., Hiroshi Nishijima and $300,000 of which was provided by a consultant to the Company) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent at the First Closing. At the First Closing, the Company issued an aggregate of (i) 3,095,925 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for an aggregate of up to 420,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up to an aggregate of 8,680,443 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B Warrants. As a result of the First Closing, the Company received $4,786,963 of cash and cash equivalents after giving effect to offering fees and expenses.
Further, on February 4, 2025, the Company held the Second Closing of this Offering for gross proceeds of $1,437,936 (before deduction of fees to the Placement Agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent at the Second Closing. At the Second Closing, the Company issued an aggregate of (i) 1,049,796 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for an aggregate of up to 872,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up to an aggregate of 4,804,491 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B Warrants. As a result of the Second Closing, the Company received $1,249,911 of cash and cash equivalents after giving effect to offering fees and expenses.
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On March 31, 2025, the Company further entered into a securities purchase agreement, substantially in the same form as the December 2024 SPA and the January 2025 SPA with certain additional accredited investors in connection with the third closing of the Offering (the “Third Closing”). The Company did not receive any cash proceeds in the Third Closing. The securities were issued to the investors either (i) as consideration for waiving certain rights that such investors may have had in connection with a most favored nations provision included in the transaction documents for a prior financing of Zoomcar, Inc. or (ii) to settle outstanding amounts owed by the Company to its Placement Agent and the Legal Counsels. Pursuant to the terms and conditions of the Securities Purchase Agreement, the Company issued to such investors an aggregate of $15,639,099 of securities consisting of 501,318 shares of common stock of the Company, par value $0.0001 per share (the Common Stock). The Company along with the Common Stock issued (i) Series A Warrants to purchase up to an aggregate of 6,706,192 shares of Common Stock at an exercise price of $6.24 per share, which takes into account a “share combination event” adjustment effective following the issuance of such warrants as a result of the Reverse Split (the “Series A Warrants”) and (ii) Series B Warrants to purchase initially no shares of Common Stock and then up to a maximum of 2,004,955 shares of Common Stock subject to certain adjustments, at an initial exercise price of $0.002.
On June 24, 2025, the Company issued a bridge note to certain investors totaling $402,000 at a discount of $42,000. The note is repayable in five monthly installments beginning November 30, 2025, and maturing on March 31, 2026, with interest accruing at 12% per annum on the outstanding principal. The Company received net proceeds of $350,000 after adjusting deduction of legal and due diligence fees of $10,000. Additionally, $45,500 (i.e., 13% of net proceeds) is due to the placement agent relating to the issuance of these bridge notes which is directly attributable to the loan raised, thereby bringing the total debt issuance costs to $55,500.
On July 31, 2025 , the Company entered into Securities Purchase Agreements with certain institutional accredited investors pursuant to which the Company issued Bridge notes for a total principal amount of $206,225 with an initial issue discount of $23,725. The net proceeds disbursed to the Company were $175,000 after deduction of legal and due diligence fees of $7,500.
On August 19, 2025, the Company closed a Securities Purchase Agreement (“Labrys SPA”) with Labrys Fund II, L.P. (“Labrys”) pursuant to which it issued a promissory note totaling $180,000 at a discount of $18,000. The note is repayable in 12 months maturing on August 19, 2026 with interest accruing at 12 % per annum on the outstanding principal. The Company received net proceeds of $158,500 after adjusting deduction of legal and due diligence fees of $3,500.
On August 24, 2025, the Company issued a convertible note to AES Capital Management, LLC(“AES”) totaling $112,500 through 2 convertible notes of $75,000, and $37,500 respectively (“AES Notes”). The note amounting $75,000 is the “Primary Note” and the subsequent note of $37,500 is the “Secondary Note”. The AES Notes are repayable in 12 months from their respective closing dates with interest accruing at 8% per annum on the outstanding principal. As of date of filing of this 10-Q, the Company received net proceeds of $ 71,000 after adjusting deduction of legal and due diligence fees of $4,000 from the issuance and closing of the Primary Notes.
On August 24, 2025, the Company issued a convertible note to CFI CAPITAL LLC (“CFI”) totaling $150,000 at a discount of $15,000 (“CFI Note”). The CFI Note is repayable in 12 months maturing on August 24, 2026 with interest accruing at 6 % per annum on the outstanding principal. The Company received net proceeds of $130,000 after adjusting legal cost of $5000.
We believe that the current cash and cash equivalents will allow us to continue operations through March 31, 2026 assuming we do not make any payments on our currently outstanding indebtedness and withhold some future accruals, however there can be no assurance that this will be the case. Accordingly, we believe that additional funds will be required to support operations and, in the long term, the growth of our business. Our operations have consumed substantial amounts of cash, and we have incurred operating losses since we began operating in 2013. While our cash consumption has been reduced following our business transition from short-term rental of vehicles owned by or leased to Zoomcar to an online platform for peer-to-peer car sharing, we have consumed significant amounts of cash in effecting such transition in terms of technology and platform innovation, and our cash consumption has varied over time. Our cash needs will depend on numerous factors, including our revenues, upgrade and innovation of our peer-to-peer car sharing platform, customer and market acceptance and use of our platform, and our ability to reduce and control costs. We expect to devote substantial capital resources to, among other things, fund operations, continued improvement, upgrading or innovation of our platform, and expand our international outreach. If we are unable to secure such additional financing, it will have a material adverse effect on our business, and we may not be able to meet our obligations or continue as a going concern.
Our Common Stock is quoted on an OTC Markets Group trading platform, the OTCQB, instead of a national exchange or quotation system. Accordingly, our investors may experience significant volatility in the market price of our Common Stock and have difficulty selling their shares.
Our Common Stock is currently quoted on an OTC Markets Group trading platform, the OTCQB, under the ticker symbol “ZCAR.” The OTC Markets Group is a regulated quotation service that displays real-time quotes, last sale prices, and volume limitations in over-the-counter securities. Trading in shares quoted on an OTC Markets Group trading platform is often thin and characterized by volatility in trading prices. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions. As a result, there may be wide fluctuations in the market price of the shares of our Common Stock for reasons unrelated to operating performance, and this volatility, when it occurs, may have a negative effect on the market price for our securities. Moreover, the OTC Markets Group is not a stock exchange, and trading of securities on one of its trading platforms is often more sporadic than the trading of securities listed on a national quotation system or stock exchange. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our Common Stock improves.
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Because our Common Stock is quoted on the OTCQB and not listed on a national exchange, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because it may be considered a penny stock and thus be subject to the penny stock rules.
The SEC has adopted a number of rules to regulate a “penny stock” that restricts transactions involving stock which is deemed to be a penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 5g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or traded on Nasdaq if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares of common stock may, in the future constitute, a “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers may discourage such broker-dealers from effecting transactions in shares of our common stock, which could severely limit the market liquidity of such shares of common stock and impede their sale in the secondary market.
A U.S. broker-dealer selling a penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with a net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse) must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the “penny stock” regulations require the U.S. broker-dealer to deliver, prior to any transaction involving a “penny stock”, a disclosure schedule prepared in accordance with SEC standards relating to the “penny stock” market, unless the broker-dealer or the transaction is otherwise exempt. A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to any “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks.”
You should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, resulting in investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
On August 5, 2025, we received notice from the OTCQX U.S. tier of OTC Markets Group that our Global Market Capitalization has been below the $5.0 million minimum for more than 30 consecutive calendar days, and that we therefore no longer satisfy OTCQX continued qualification standards.
Following receipt of the notice and after evaluating available alternatives, the Company elected to transition its quotation to the OTCQB tier of OTC Markets Group (“OTCQB”).
On November 4, 2025, the Company’s ordinary shares commenced trading on the OTCQB under the ticker symbol “ZCAR.” The transition from the OTCQX to the OTCQB does not affect the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended, or the public trading of its securities in the United States.
Failure to comply with the continued qualification standards within, and any removal from OTCQB could materially and adversely affect the liquidity and market price of our common stock and our access to capital.
Earlier on August 5, 2025, we had received a written notice from the OTCQX U.S. tier of OTC Markets Group stating that our Global Market Capitalization has remained below the minimum $5.0 million required under Section 2.1(B) of the OTCQX Rules for U.S. Companies for more than 30 consecutive calendar days and, as a result, we no longer satisfy the OTCQX standards for continued qualification. Under those rules, we have a 90-calendar-day cure period, expiring on November 3, 2025, to regain compliance by maintaining a Global Market Capitalization of at least $5.0 million for 10 consecutive trading days. Following receipt of the notice and after evaluating available alternatives, the Company elected to transition its quotation to the OTCQB tier of OTC Markets Group (“OTCQB”).
On November 4, 2025, the Company’s ordinary shares commenced trading on the OTCQB under the ticker symbol “ZCAR.” The transition from the OTCQX to the OTCQB does not affect the Company’s reporting obligations under the Securities Exchange Act of 1934, as amended, or the public trading of its securities in the United States.
If the Company fails to comply with the OTCQB Rules its securities could be removed from OTCQB and may trade on a less liquid market tier or otherwise experience reduced liquidity. Any such outcome could, among other things: (i) further depress the market price and increase the volatility of our common stock; (ii) limit or preclude the ability of certain brokers to make a market in, or of certain institutional investors to purchase or hold, our securities; (iii) reduce analyst coverage and overall investor interest; (iv) impair our ability to raise additional capital on acceptable terms or at all; and (v) adversely affect the terms of any financing or strategic transactions we may seek. In an effort to regain or maintain compliance, the Company may consider and pursue one or more corporate or financing actions—such as equity or equity-linked issuances, strategic transactions, or other measures—which could be dilutive to existing stockholders, increase our leverage, or otherwise involve significant costs and risks. Even if the Company regains compliance, it may be unable to sustain it, and any future failure could have the same adverse effects.
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We require additional capital to support current operations and will require additional capital to support the growth of our business, which may not be available on terms acceptable to us, or at all.
To continue current operations, we will need to raise capital imminently. Further, to continue to effectively compete thereafter, we will require additional funds to support the growth of our business. Our operations have consumed substantial amounts of cash, and we have incurred operating losses, since we began operating in 2013. While our cash consumption has been reduced following our business transition from short-term rental of vehicles owned by or leased to Zoomcar to an online platform for peer-to-peer car sharing, we have consumed significant amounts of cash in effecting such transition in terms of technology and platform innovation, and our cash consumption has varied over time. Because of our limited resources the company was not able to expand to emerging markets outside of India and in fact, discontinued operations in Vietnam during June 2023 and subsequently in Egypt, Indonesia during June 2024 as a result.
Further, as a result of the consummation of the Business Combination, our expenses have increased substantially in connection with actions and efforts required to operate as a public company. During the six months ended September 30, 2025, we have incurred expenses in maintaining the listing requirements and complying with statutory filings with SEC along with significant professional and consultancy fee to professionals and we contemplate that we will continue to incur these expenses as long as we remain a public company to fulfill which we will need additional capital.
Moreover, we expect our expenses to increase moderately with growth in our business operations. We do not currently have sufficient cash resources to operate our business beyond March 31, 2026 (assuming that we do not repay any of our currently outstanding indebtedness) and accordingly, will need to raise capital imminently to continue our operations and to fully execute our business plan. Additionally, circumstances could cause us to consume capital more rapidly than we currently anticipate and if our cash resources are insufficient to satisfy our cash requirements, we may seek to issue additional equity or debt securities or obtain new or expanded credit facilities or identify and secure additional sources of capital. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including our future financial condition, results of operations, cash flows, share price performance, liquidity of capital and lending markets and governmental regulations in India. In addition, incurring indebtedness would subject us to increased debt service obligations and could result in operating and financing covenants that would restrict our operations. There can be no assurance that financing will be available in a timely manner or in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, will severely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. In addition, any issuance of equity or equity-linked securities could result in significant dilution to our existing shareholders. Additionally, fundraising efforts may divert our management from its day-to-day duties and activities, which may affect our ability to execute on our business plan. If we do not raise substantial additional capital imminently to continue operations in the short term or otherwise when required or in sufficient amounts and on acceptable terms, we may need to:
| ● | significantly delay, scale back or discontinue certain business initiatives, such as our international expansion; |
| ● | significantly delay key investments in IoT, advanced computer vision, machine learning and related artificial intelligence technology; or |
| ● | significantly delay our consumer brand-building initiatives, thereby delaying our broader expansion. |
| ● | Our future funding requirements, both short-term and long-term, depend on many factors, including but not limited to: |
| ● | our ability to successfully scale our business within the market in which we currently operate, including by increasing the number and quality of Host vehicles and attracting and retaining more Guests to use our platform to meet a broader variety of mobility needs; |
| ● | our ability to successfully expand into additional emerging markets as opportunities to grow our operations become available to us; |
| ● | the pace of technological development in core focus areas such as IoT, computer vision, machine learning, and artificial intelligence; |
| ● | the cost to establish, maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make in preparing, filing, prosecution, defence and enforcement of any intellectual property rights; |
| ● | the effect of competing technological and market developments; and |
| ● | market acceptance of our platform and the functionality it provides to facilitate peer-to-peer car sharing. |
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If lack of available capital prevents us from proceeding with the execution of our business plan, our ability to become profitable will be compromised and our business will be harmed.
Future sales of our securities may affect the market price of the Common Stock and result in material dilution, including the anti-dilution protection in the warrants issued in 2024. We are also in default of various outstanding debt obligations, including under the Notes issued to ACM, and may issue shares of Common Stock or other securities to satisfy those obligations in the future (in the case of ACM, subject to receipt of shareholder approval). The issuance of shares of Common Stock or other securities in the future will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock.
We will finance our immediate cash needs (and expect to finance our future cash needs until we become profitable, if ever) through equity offerings, debt financings or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. We will require substantial funding to fund our business. In June 2024 we issued warrants that contain an “alternative cashless exercise” provision which gives the warrant holder the right to exchange the warrant on a one-for-one basis for shares of Common Stock at any time that the warrant is exercisable without any cash payment and without regard to the then market price of the Company’s Common Stock or exercise price of the warrant. In addition, the warrants include a provision that resets the warrant exercise price with a proportionate adjustment to the number of shares underlying the warrant in the event of a reverse split of the Company’s Common Stock at any time between the issuance date and the three year anniversary of the issuance date (a “Share Combination Event”). In the event of a Share Combination Event, the exercise price of the warrant will be reset to a price equal to the lesser of (i) the then exercise price and (ii) the lowest volume weighted average price (VWAP) during the period commencing five trading days immediately after the date the Company effects both the reverse stock splits, subject to a floor price of $283.2 prior to receipt of stockholder approval or $56.64 following receipt of stockholder approval (in each case, adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction, the “Floor Price”). The warrants are also subject to full ratchet anti-dilution protection for any issuances of Company securities (other than certain excluded issuances) at a price or effective price (as determined in accordance with the terms of the warrant, the “Dilutive Issuance Price”) that is less than the then current exercise price of the warrants following the issuance date (a “Dilutive Issuance”). In the event of a Dilutive Issuance, the exercise price of the warrants will be reduced to the lower of the Dilutive Issuance Price and the lowest VWAP during the five consecutive trading days commencing after the date of the Dilutive Issuance, in each case, subject to the Floor Price, and there will be a proportionate adjustment to the number of shares underlying the warrant. In connection with the Business Combination, we also issued the Notes to ACM in satisfaction of certain transaction expenses associated with the Business Combination. The Notes contain price based anti-dilution protection on the conversion price of such Notes down to a floor price of $500 per share (considering both reverse stock splits effectuated by the Company) which has already been reached. While the Notes have already converted into the maximum number of shares permissible under the terms of the Notes without receiving stockholder approval, we may seek stockholder approval in the future to allow for the Notes to convert into additional shares. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, anti-dilution provision may be triggered, and the terms of the newly issued securities may include liquidation or other preferences that adversely affect your rights.
Any future adjustments to the exercise price of the warrants (or additional issuances to make the Financing Investors whole) may have a negative impact on the trading price of our Common Stock. Additionally, raising additional capital with new investors may be difficult as a result of anti-dilution protection. Sales of substantial amounts of Common Stock in the public market, or the perception that such sales could occur, could materially adversely affect the market price of the Common Stock and may make it more difficult for you to sell your securities at a time and price which you deem appropriate.
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In addition to our defaults under current indebtedness described elsewhere here, certain of our debt financing arrangements are currently in default and we have delayed certain other payments to lenders, which may restrict our current and future business and operations.
Since November 2023, we have been in violation of our scheduled monthly installment payment obligations of $215,337 per month on our lease liability with Ayvens Group (f/k/a Leaseplan India Private Limited) (“Leaseplan”). Leaseplan notified us on February 7, 2024, that we are in default of our November 2023 payment. As of the date hereof, we are in default beyond the 30-day extended cure period (as envisaged under the terms of our debt with Leaseplan) of our November 2023 payment and continue to be default of all EMIs thereafter. As a result of such defaults, as of the date hereof, Leaseplan (i) has initiated the process of repossession of all vehicles, and (ii) has invoked the bank guarantee of $120,482 which was a security created by Zoomcar in favor of Leaseplan. Such outcomes may have a material adverse impact on our business, operations or financial condition. The Company continues to negotiate a deferred payment plan to the restructured debt proposal shared by the Company wherein the debt after certain waivers and discounts, will stand restructured to $4,755,942 and the Company is hopeful that Leaseplan will issue a comfort letter in this regard acknowledging the proposed payment schedule spread across six tranches repayment of the restructured debt. As of the date of this Form 10-Q, the Company has already cleared the first three tranches in accordance with the proposed payment schedule as per the comfort letter, amounting to $2,847,177 (approx.) towards the outstanding debt. The Company is yet to clear the fourth tranche of payment (as per the proposed payment schedule) which was due as of July 31, 2025 and has sought further extension of time to repay the remaining three tranches. The Company awaits a confirmation from LeasePlan on the extension sought, but given the continuing negotiations, and the expected comfort letter, we do not contemplate any immediate legal action against the Company in this regard. If LeasePlan refuses to issue such comfort letter, or we are unable to execute a settlement agreement with respect to the restructured debt, or fail to honor the obligations under any proposals accepted or agreement executed for the subject matter it may, possibly result in inter alia (a) the entire outstanding debt becoming due and payable, and (b) the withdrawal of a conditional waiver of $1.2 million which was given during a prior restructuring and will become immediately due and payable with interest of 1.5% per month.
Further, we are in violation of the final payment obligation of $371,805 (approx.) on our loan with Mahindra & Mahindra Financial Services Limited (“Mahindra”). As of the date hereof, Mahindra has not formally extended or provided a waiver of such overdue payment. Mahindra may initiate legal action for resolution of the dispute. Such outcomes may have a material adverse impact on our business, operations or financial condition.
Additionally, we are in various stages of discussion on deferment with our other lenders with regards to the scheduled loan payments from November 2023 onwards and extending up to July 2025. However, we have not received any formal notice of default from these other lenders, but such lenders have not formally extended or provided waivers of such overdue payments. While the Company is actively engaging in discussions with its lenders and vendors to restructure the existing indebtedness by means of reductions and deferment of payment timelines, no assurance can be made that the Company will be successful in restructuring these outstanding liabilities.
As a result of the foregoing, the Company is at material risk that the above parties including certain vendors could initiate insolvency proceedings under Indian Insolvency and Bankruptcy Code 2016 (IBC). As per the provisions of IBC, an operational creditor can initiate an insolvency resolution process against the Company where the minimum amount of the default is INR 1,00,00,000 (Rupees One crore) or ~USD 119,000. If insolvency proceedings were initiated and the petition is admitted, it could result in significant disruptions to our operations, loss of management control, and a substantial decrease in stockholder value. Furthermore, the outcomes of such proceedings are uncertain and could materially affect our financial position and results of operations.
The Zoomcar Board and Zoomcar management are evaluating options to improve liquidity and address Zoomcar’s long-term capital structure, however, there can be no assurance that any such option or plan will be available on favorable terms, or at all.
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We have issued a significant number of warrants and exercise of these securities and the sale of the shares of Common Stock issuable thereunder (along with the issuance of any similar securities in the future,) will dilute your percentage ownership interest and may also result in downward pressure on the price of our Common Stock.
As of November 12, 2025, we have issued and outstanding options to purchase 16 shares of our Common Stock with a weighted average exercise price of $11,460, pre-funded warrants to purchase 4,249,078 shares of Common Stock, warrants to purchase 19,416 shares of Common Stock with an exercise price of $6,000 per share which were assumed by the Company in connection with the Business Combination, 11,500,000 Public Warrants to purchase 5,750 shares of our Common Stock, each Public Warrant exercisable into one two-thousandth of one share of Common Stock at an exercise price of $11,420.00 per full share, warrants to purchase 5,297 shares of Common Stock at a current exercise price of $56.64 per share which were issued to the Placement Agent in June 2024, November Series A Warrants to purchase 996,939 shares of Common Stock at a current exercise price of $16.12, November Series B Warrants to purchase up to 5,865 shares at an exercise price of $0.002 per share, November 2024 Placement Agent warrants to purchase 53,447 shares at a current exercise price of $16.12 per share, November 2024 Placement Agent Series A warrants to purchase 106,893 shares at a current exercise price of $16.12 per share.
As of November 12, 2025, we also have issued and outstanding December 2024 Series A Warrants to purchase 5,009 shares of Common Stock at a current exercise price of $6.24 per share, December Series B Warrants to purchase up to 94,238 shares of Common Stock at a current exercise price of $0.002 per share,
As of November 12, 2025, we also have issued and outstanding February 2025 Series B Warrants to purchase up to 89,744 shares of Common Stock at a current price of $0.002 per share,
As of November 12, 2025, we have also issued and outstanding March 2025 Series A Warrants to purchase 2,544,134 shares of Common Stock at a current exercise price of $6.24 per share, and March Series B Warrants to purchase up to 591,275 shares of Common Stock at a current exercise price of $0.002 per share,
All Series B Warrants issued in the December Offering, the January/February Offering and the March Offering are exercisable for the maximum number of shares of Common Stock, because on March 18, 2025 the Board determined to fix the “Reset Price” of all of such Series B Warrants down to the “Floor Price” of $6.24 per share. The Company has agreed to deem the “Reset Date” of the Series B Warrants to be effective.
Because the market for our Common Stock is thinly traded, the sales and/or the perception that those sales may occur, could adversely affect the market price of our Common Stock. Furthermore, even though, as of the date hereof, the options and warrants are all currently out of the money (other than the Series B Warrants, which all have an exercise price of $0.002 per share), the mere existence of a significant number of shares of Common Stock issuable upon exercise of these securities may be perceived by the market as having a potential dilutive effect, which could lead to a decrease in the price of our Common Stock.
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Risks related to our Business and Operations
Our current business model’s limited operating history and financial results make our future results, prospects, and the risks we may encounter difficult to predict.
Although Zoomcar commenced operating in 2013, we have recently transitioned from a prior business model to our current business model, consisting of our asset-light online platform for peer-to-peer car sharing. As a result of this transition, certain components of our financial statements have experienced variation, and our operating history may not be indicative of our future growth or financial results. The limited history of our current business model makes predicting our future operating and other results difficult, if not impossible, and there is no assurance that we will be able to grow our revenues in future periods. Our results of operations are impacted by a number of factors, some of which are beyond our control, and we may suffer adverse impacts to our further development as a result of circumstances which include decreasing customer demand, increasing competition, declining growth of the car sharing industry in general, insufficient supply of vehicles on our platform, or changes in government policies or general economic conditions. We will continue to develop and improve the features, functions, technologies, and other offerings on our platform to increase our Guest and Host bases and volume of bookings on our platform. However, the execution of our business plan is subject to uncertainty and bookings may not grow at the rate we expect. If our growth rates decline, investors’ perceptions of our business and prospects may be adversely affected and the market price of our Common Stock could decline.
Existing and potential holders of our securities should also consider the risks and uncertainties that a company with a limited history, such as ours, will face in the evolving personal mobility solutions market. In particular, there can be no assurance that we will:
| ● | successfully execute on our business plan, particularly in light of our current liquidity and capital resources; |
| ● | facilitate sufficient bookings to become profitable in the near-term if at all; |
| ● | attract increasing numbers of Hosts and Guests within our current market and future potential additional markets; |
| ● | increase penetration within our current markets through continued improvements in vehicle density, platform features and strategic marketing efforts; |
| ● | enable us to successfully execute our business plans; |
| ● | enhance our brand recognition and awareness; |
| ● | acquire new Hosts and Guests by increasing our market penetration with deeper market coverage; |
| ● | develop new platform functionality and features that enhance our ability to retain Guests and Hosts; |
| ● | develop, improve, or innovate our proprietary technology that allows for a sustainable competitive advantage; |
| ● | attract, retain, and manage a sufficient staff of management and technology personnel; or |
| ● | respond effectively to competitive pressures. |
Our operating and financial forecasts are subject to various known and unknown contingencies and factors outside of our control and may not prove accurate, and we may not achieve results consistent with management’s expectations.
Our quarterly and annual operating results have fluctuated in the past and are likely to fluctuate in the future. During any given period, our operating and financial results may be influenced by numerous factors, many of which are unpredictable or are outside of our control. Additionally, our limited operating history with our current peer-to-peer car sharing business model makes it difficult for us to forecast our future results and subjects us to a number of uncertainties, including our ability to plan for and anticipate future growth. As a result, you should not rely upon our past quarterly and annual operating results as indicators of future performance. We have encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly evolving markets, such as the risks and uncertainties described herein.
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We have a history of operating losses and negative cash flow, we have limited cash resources, we will need to raise additional funds imminently to finance operations and as a result there is substantial doubt about our ability to continue as a going concern.
We have a history of operating losses and expect to continue incurring operating losses in the foreseeable future as we continue to develop our current business model and enhance our platform offerings. We also have indebtedness that is in default in excess of our current capital resources (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” in our Form 10-Q for the six months ended September 30, 2025). On June 18, 2024, the Company entered into a securities purchase agreement with certain institutional accredited investors (the “June Aegis Securities Purchase Agreement”) pursuant to which the Company issued and sold an aggregate of $3,600,000 in principal amount of notes (the “June Notes”) and warrants to purchase up to an aggregate of 1,267,728 shares of Common Stock (which takes into account an adjustment following the Company’s Share Combination Event that was effective on October 22, 2024) (the “June Warrants”) for gross proceeds of $3,000,000.
Additionally, on November 7, 2024, the Company closed the November 7 Placement for gross proceeds of $9.15 million (including $2.5 million of which was provided by one of the Company’s directors) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent in the November 7 Placement. At closing of the November 7 Placement, the Company issued an aggregate of 2,137,850 units at a price of $4.28 per unit, each unit consisting of one share of Common Stock (or pre-funded warrant in lieu thereof), two November Series A Warrants (as hereinafter defined) each to purchase one share of Common Stock and a November Series B Warrant (as hereinafter defined) to purchase such number of shares of Common Stock, as determined on the November Reset Date, which does not reflect the Second Reverse Split. As a result of the November 7 Placement, the Company received $3.62 million of cash and cash equivalents after giving effect to offering fees and expenses, the payment of $3.8 million to the holders of the Company’s June 2024 notes and a holdback of $0.2 million for indemnification of the Placement Agent as described in more detail herein.
Further, on December 24, 2024, the Company held the First Closing of this Offering for gross proceeds of $5,484,843 (including $50,000 of which was provided by the Company’s former Chief Executive Officer i.e., Hiroshi Nishijima and $300,000 of which was provided by a consultant to the Company) (before deduction of fees to the placement agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent at the First Closing. At the First Closing, the Company issued an aggregate of (i) 3,095,925 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for an aggregate of up to 420,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up to an aggregate of 8,680,443 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B Warrants. As a result of the First Closing, the Company received $4,786,963 of cash and cash equivalents after giving effect to offering fees and expenses.
Further, on February 4, 2025, the Company held the Second Closing of this Offering for gross proceeds of $1,437,936 (before deduction of fees to the Placement Agent and other offering expenses payable by the Company). The Placement Agent in this Offering acted as exclusive placement agent at the Second Closing. At the Second Closing, the Company issued an aggregate of (i) 1,049,796 shares of Common Stock, which does not reflect the Second Reverse Split (ii) Pre-Funded Warrants issued to certain of the investors, at their option, exercisable for an aggregate of up to 872,000 shares of Common Stock, which does not reflect the Second Reverse Split, to the extent that the issuance of shares of Common Stock would cause such Investors to beneficially own more than 4.99% or 9.99% of the shares of Common Stock outstanding. Also issued along with the shares of Common Stock and/or the Pre-Funded Warrants were (x) Series A Warrants to initially purchase up to an aggregate of 4,804,491 shares of Common Stock, which does not reflect the Second Reverse Split, subject to certain adjustments and (y) Series B Warrants to initially purchase no shares of Common Stock, subject to certain adjustments as provided in the Series B Warrants. As a result of the First Closing, the Company received $1,249,911 of cash and cash equivalents after giving effect to offering fees and expenses.
On June 24, 2025, the Company closed two Securities Purchase Agreements (each, a “Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia limited liability company (“DLL”), and Boot Capital LLC, a Delaware limited liability company (“Boot”) (both investors collectively “June 2025 Noteholders”), respectively, in connection with a private placement offering of convertible bridge notes (each, a “Note” and collectively, the “Notes”) in the aggregate principal amount of $290,240.00 and $111,760.00, respectively. Pursuant to the Purchase Agreements, DLL purchased a Note in the original principal amount of $290,240.00 with an original issue discount of $30,240.00 and net proceeds to the Company of $250,000.00, after fees. Boot purchased a Note in the original principal amount of $111,760.00 with an original issue discount of $11,760.00 and net proceeds to the Company of $100,000.00. Each Note bears interest at a rate of 12% per annum and is due on March 30, 2026. The Notes include scheduled installment repayments, and may be prepaid in full by the Company at a discount to the outstanding balance. The Notes are subject to default interest at a rate of 22% per annum and include customary events of default and covenants.
On July 31, 2025 , the Company further entered into two Securities Purchase Agreements (each a “Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia limited liability company (“DLL”), and Boot Capital LLC, a Delaware limited liability company (“Boot”) (both investors collectively “July 2025 Noteholders”), respectively pursuant to which the Company issued convertible Bridge Notes(“July Bridge Notes”) for a total principal amount of $206,225 with an initial issue discount of $23,725. The net proceeds disbursed to the Company were $175,000 after deduction of legal and due diligence fees of $7,500. Hence, the total debt issuance costs amounts to $7,500. The Bridge notes have a maturity date of May 31, 2025, and bear interest at an annual rate of 12%. The notes include scheduled monthly installment repayments and interest payments starting August 30, 2025 and may be prepaid in part or full, by the Company at a discount to the outstanding balance. The notes are subject to default interest rate of 22% per annum and include customary events of default.
On August 19, 2025, the Company closed a Securities Purchase Agreement (“Labrys SPA”) with Labrys Fund II, L.P. (“Labrys”) in connection for purchase of a promissory note convertible on default. Pursuant to the Labrys SPA, Labrys purchased a note for a principal amount $180,000 with an original issue discount of $18,000 (“Labrys Note”)and net proceeds to the Company of $158,500 after adjusting issuance cost of $3,500. The note is repayable in 12 months maturing on August 19, 2026 with interest accruing at 12 % per annum on the outstanding principal. This note is subject to a default interest at a rate of 22% per annum and include customary events of default and covenants.
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On August 24, 2025, the Company closed a Securities Purchase Agreement (“AES SPA”) with AES Capital Management, LLC(“AES”) in connection with purchase of convertible redeemable notes. Pursuant to the AES SPA, AES purchased 2 notes for an aggregate principal amount $112,500split into $75,000and $37,500 respectively (“AES Notes”). The note amounting $75,000 is the “Primary Notes” and the subsequent note of $37,500 is the “Secondary Note”. The AES Notes are repayable in 12 months from their respective closing dates with interest accruing at 8% per annum on the outstanding principal. As of date of filing of this 10-Q, the Company received net proceeds of $ 71,000 after adjusting deduction of legal and due diligence fees of $4,000 from the issuance and closing of the Primary Notes. The AES Notes are subject to a default interest at a rate of 22% per annum and include customary events of default and covenants.
On August 24, 2025, the Company closed a Securities Purchase Agreement (“CFI SPA”) with CFI CAPITAL LLC (“CFI”) in connection with purchase of convertible redeemable notes. Pursuant to the CFI SPA, CFI purchased a convertible for a principal amount of $150,000 at an original issue discount of $15,000. The note is repayable in 12 months maturing on August 24, 2026 with interest accruing at 6 % per annum on the outstanding principal. The Company received net proceeds of $130,000 after adjusting issuance cost of $5000. This note is subject to a default penalty amounting to increase in the principal amount by 50% and includes customary events of default and covenants.
The Company believes that current cash and cash equivalents will allow the Company to continue operations through March 31, 2026 assuming that the Company makes no payments on its currently outstanding indebtedness and only pays current operating accruals, however, there can be no assurance that this will be the case. Even if our current cash position supports operations through March 31, 2026, we cannot assure that this cash will be sufficient in the longer run and we will be required to obtain a further infusion of cash funds to support our operations or address the indebtedness, including through this offering. The Company will still need to seek financing for the purpose of raising additional funds to be able to meet its obligations and so that there will no longer be substantial doubt about its ability to continue as a going concern. However, there is no assurance that the Company will be able to raise any such financing or, even if it does, that it will be sufficient for it to meet its obligations or continue as a going concern.
The Company as on November 10, 2025 has $0.41 million of cash and cash equivalents.
Accordingly, we believe that additional funds will be imminently required to support current operations and, in the long term, the growth of our business. Our operations have consumed substantial amounts of cash, and we have incurred operating losses since we began operating in 2013. While our cash consumption has been reduced following our business transition from short-term rental of vehicles owned by or leased to Zoomcar to an online platform for peer-to-peer car sharing, we have consumed significant amounts of cash in effecting such transition in terms of technology and platform innovation, and our cash consumption has varied over time. Our cash needs will depend on numerous factors, including our revenues, upgrade and innovation of our peer-to-peer car sharing platform, customer and market acceptance and use of our platform, and our ability to reduce and control costs. We expect to devote substantial capital resources to, among other things, fund operations, continued improvement, upgrading or innovation of our platform, and expand our international outreach. If we are unable to secure such additional financing, it will have a material adverse effect on our business, and we may have to limit operations in a manner inconsistent with our development.
The market for online platforms for peer-to-peer car sharing is relatively new and rapidly evolving. If we fail to successfully adapt to developments in our market, or if peer-to-peer car sharing online platforms do not achieve general acceptance, it could adversely affect our business, financial condition, and operating results.
In December 2021, we transitioned to our current peer-to-peer cash sharing business model. The market for online peer-to-peer car sharing platforms is relatively new and unproven and the data and research available regarding the market or the industry may be limited and unreliable. It is uncertain whether the peer-to-peer car sharing market will continue to develop or if our platform will achieve and sustain a level of demand and market acceptance sufficient for us to generate meaningful revenue, net income, and cash flow. Our success will depend to a substantial extent on the willingness of Hosts and Guests to use our platform to identify car sharing opportunities. Some Hosts may be reluctant or unwilling to make their vehicles available for use on our platform because of concerns which may include, but are not limited to, potential decline in the value of their vehicle if listed on our platform, uncertainty of economic benefits from platform usage, ability to recover losses associated with lost or damaged property, compliance with our platform’s terms of use, data privacy and security concerns, or other reasons.
In addition, our success also requires utilization of our platform by Guests to book vehicles. Guests’ willingness to utilize our platform may depend, among other factors, on Guests’ belief in the ease-of-use, integrity, quality, availability, safety, cost-effectiveness, convenience and reliability of our platform and the vehicles listed by Hosts for bookings thereon. Any shift in Guest preferences in the markets in which we operate could have a material adverse effect on our business. Additionally, Guests may be reluctant or unwilling to use a platform requiring Guests to provide personally identifiable information, payment information and driver’s license details, or have their driving behaviors monitored during bookings. Further, Guests may be reluctant to book vehicles containing GPS-enabled tracking or monitoring devices accessible by Zoomcar, or to use our platform at all due to the perception of the use of such devices.
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If we do not retain existing Hosts, or attract and maintain new Hosts, or if Hosts fail to provide an adequate supply of high-quality vehicles, our business, financial condition, and results of operations may be negatively impacted.
Our success in a given geographic market depends on our ability to establish and grow the scale of our platform in that market by attracting Hosts and Guests to our platform. We depend upon having Hosts register high quality vehicles on our platform, maintain the safety and cleanliness of their vehicles, and ensure that the descriptions and availability of their vehicles on our platform are accurate and up to date. These practices are beyond our direct control and the number of vehicles shared by Hosts and resulting bookings options available to Guests on our platform may decline based on a number of factors including, among other things, public health and safety concerns, including pandemics/epidemics; economic, social, and political factors; state laws and regulations regarding car sharing, or the absence of such laws and regulations, challenges obtaining, insuring, financing and servicing vehicles to list on the platform, some of which may be exacerbated by infrastructure challenges in the emerging market where we operate our business. If Hosts register and offer fewer high-quality vehicles to Guests on our platform, our bookings and revenues may decline, and our results of operations could be materially adversely affected. Further, if Hosts with available vehicles choose not to offer their vehicles through our platform because competitive car sharing platforms emerge that Hosts find more attractive than our platform, Hosts may be unwilling to continue registering vehicles or making them available for bookings through the platform. For example, Hosts may cease or reduce vehicle registrations or the periods of time they make cars available for bookings for any number of reasons, such as competitor platforms having more Guests making bookings, risk of vehicle damage for which Hosts may not be able to recoup damages from Zoomcar or for any other reason, we may lack sufficient supply of vehicles to attract Guests to utilize our platform. If Hosts do not share sufficient numbers of vehicles, or if the vehicles they register to our platform are less attractive to Guests than vehicles offered by competitors, our revenue would likely decline and our business, financial condition, and results of operations could be materially adversely affected.
Hosts are not required to make their vehicles available on our platform for a minimum sharing period or number of bookings and Hosts may choose not to share their vehicles on our platform at all if we cannot generate sufficient demand for their vehicles or if bookings through our platform are not sufficiently attractive to Hosts to retain and attract Hosts to use the platform. While we continue to invest in tools and resources and curate add-on services to support Hosts, the pricing features and other capabilities of our platform may not be as attractive to Hosts as those developed by our competitors, and Hosts may not share their vehicles on our platform as a result. If Hosts perceive that listing vehicles on our platform may be insufficiently remunerative to, for example, offset any leasing, financing, parking, registration, maintenance, and repair costs of vehicles registered to the platform, we may lose or fail to attract Hosts and may not be able to make a sufficient number of vehicles available for use by our Guests.
If we fail to retain existing Guests, or attract and maintain new Guests, our business, financial condition, and results of operations may be negatively impacted.
Our business model depends on our ability to retain and attract Guests to make bookings on our platform. There are a number of trends in and aspects of Guest preferences which have an impact on us and the car sharing industry as a whole. These include, among others, preferences for types of vehicles, convenience of online bookings, and monetary savings associated with car sharing and platform bookings relative to other possible transportation solutions. Any shift in Guest preferences, which are susceptible to change, in the markets in which we operate could have a material adverse effect on our business. For example, if the vehicles registered to our platform are not popular or of sufficient quality or are not available at locations convenient for Guests, Guests may lose interest in utilizing our platform. Additionally, if Guests find our platform not to be user-friendly or to lack functions that Guests expect from a car sharing or other online platform, Guests may decrease or stop using our platform. Our competitiveness therefore depends on our ability to predict and quickly adapt to Guest trends, exploiting profitable opportunities for platform development, innovation, and upgrades without alienating our existing Guest base or focusing excessive resources or attention on unprofitable or short-lived trends. If we are unable to respond on a timely and appropriate basis to changes in demand or Guest preferences, our business may be adversely affected.
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Additionally, if we are unable to compete with other car sharing platforms and other mobility solutions in the market in which we operate, our bookings will decrease, and our financial results will be adversely affected. Guests desiring to book vehicles through our platform must pay booking fees, which include, among other fees, “upfront booking fees,” less any applicable discounts and credits, and “value added” or trip-protection fees payable at the time of a booking; other charges may also be incurred by Guests after a booking, such as trip cancellation fees, gasoline fees, late fees and other charges. Many of these fees are generated through our platform functions and some of the fees are selected by Guests from a range of options presented to them at the time of a booking. If our booking and trip-related fees are not competitive, or our platform functionality is not appealing or outdated, or negative reviews or publications are released in connection with our platform, Guests may stop or reduce their use of our platform, our business, results of operations, reputation, and financial condition may be adversely affected.
If we are unable to introduce new or upgraded platform features that Hosts or Guests recognize as valuable, we may fail to retain and attract such users to our platform and our operating results would be adversely affected.
To continue to retain and attract Hosts and Guests to our platform, we will need to continue to introduce new or upgraded features or product offerings, functions and technologies that add value for Hosts and Guests that differentiate us from our competitors. Developing and delivering these new or upgraded features, functions and technologies is costly, and the success of such features, functions and technologies depends on several factors, including the timely completion, introduction, and market acceptance of such features, functions, and technologies. Moreover, any such new or upgraded features, functions and technologies may not work as intended or may not provide intended value to Hosts and Guests. If we are unable to continue to develop new or upgraded features, functions, and technologies, or if Hosts and Guests do not perceive value in such new or upgraded features, functions and technologies, Hosts and Guests may choose not to use our platform, which would adversely affect our operating results.
We have made substantial investments to develop new or upgraded features, functions, and technologies, and we intend to continue investing significant resources in developing new technologies, tools, features, services and other platform offerings. If we are unable to attract/retain and pay qualified technical staff required to continue our platform feature development efforts, we may not realize the expected benefits of our developments.
There can be no assurance that the new developments will exist or be sustained at the levels that we expect, or that any of these new developments will gain sufficient traction or market acceptance to generate enough revenue to offset any new expenses or liabilities associated with these new investments. Our development efforts with respect to new features, functions and technologies on our platform could distract management from current operations and will divert capital and other resources from our more established functions and technologies. Even if we are successful in developing new features, functions, or technologies, or otherwise update or upgrade our platform, regulatory authorities may subject us to new rules or restrictions in response to our innovations that could increase our expenses or prevent us from successfully commercializing the new features, functions, technologies, updates, or upgrades of our platform. If we are unable to adapt in a cost-effective and timely manner in response to the changing market conditions or platform users’ preferences, either for technical, legal, financial, or other reasons, our business, financial condition, and results of operations may be materially and adversely affected.
Our success depends upon our ability to maintain favorable customer reviews and ratings, and if our reputation suffers, our business, financial condition and operating results may be adversely affected.
We have a customized rating and review system connected to our search-and-ranking-base algorithm in order to provide a more holistic, more relevant overall search experience for the Guests. By combining Host ratings and reviews into the overall sort algorithm, our platform is able to highlight particular Hosts who are more likely to receive bookings. The reliable and trustworthy ratings and reviews of our Hosts and Guests are crucial to our business, which will to a substantial extent affect our Hosts and Guests’ determination as to whether to utilize the platform to book cars.
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Monitor the rating and review system on an ongoing basis to enforce quality standards and build trust among members of our community. We have procedures in place to combat fraud or abuse of our rating and review system, but there is no assurance that these procedures are or will be effective, or at all. Further, Hosts and Guests can leave reviews or ratings on third-party platforms or websites, which are out of our control and off platform reviews and ratings or other statements about the platform, or a business or brand may have adverse impact on our business operations. If any Hosts and Guests leave negative ratings and reviews, it may not only cause a decrease in the number of existing Hosts and Guests but also may negatively affect acquisitions of new Hosts and Guests, which may adversely affect our business, financial conditions and results of operations. Unreliable ratings and reviews could also make it more difficult for us to enforce quality standards, which could damage our reputation and reduce trust within our community.
Additionally, our ability to attract and retain Hosts and Guests is dependent in part on our ability to provide high-quality customer support services. Hosts and Guests depend on our customer support centers to resolve any issues relating to our platform both during and after their trips. As we continue to grow our business and improve our platform, we will face challenges related to providing high-quality support services at scale. Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation, and adversely affect our ability to scale our platform and business, our financial condition, and results of operations.
A former employee of Zoomcar India has instituted a wrongful termination suit and claims that certain Zoomcar options have vested.
In February 2023, a former employee of Zoomcar India instituted a suit before the City Civil and Sessions Judge at Mayo Hall, Bengaluru against Zoomcar India, Zoomcar and IOAC challenging his termination, claiming approximately $400,000 in damages, and claiming that 100,000 options to purchase shares of Zoomcar have vested. On March 3, 2023, the City Civil and Sessions Judge at Mayo Hall, Bengaluru, issued an interim injunction to restrain each of Zoomcar and IOAC from “alienating or dealing” the 100,000 shares (without giving effect to the reverse splits and the conversion ratio for the business combination) of Zoomcar claimed by the former employee while the suit is pending. Zoomcar believes that such claims are baseless and is attempting to have the interim order vacated. In addition, Zoomcar India filed an application in the former employee’s suit, seeking that IOAC be deleted from the array of parties in the suit, inter alia since (i) IOAC is neither a necessary nor a proper party to the suit; (ii) no reliefs have been sought by the former employee from IOAC; and (iii) there is no cause of action against IOAC. However, there can be no assurance that Zoomcar India and Zoomcar will be successful in their efforts to have the matter vacated or IOAC deleted from the parties, and such efforts may be time-consuming, costly and may have reputational and other negative effects on Zoomcar.
The founder and former CEO of the Company has initiated a civil complaint against the Company contesting the reasons for his termination and has raised certain other claims with regards to his ownership of the Company and compensation for termination of his employment.
On September 26, 2024, we received a copy of a complaint filed with the United States District Court for the District of Delaware wherein our founder and former CEO Mr. Moran has challenged the Company’s termination of his employment for cause, effective as of June 18, 2024. Mr. Moran has contested the facts leading up to the grounds on which his termination was based and has also claimed that this alleged wrongful termination has deprived him of his vested right to 8% of the Company’s outstanding equity that he claims was owed to him under his Employment Agreement. He has also claimed that in connection with his termination he is entitled to the payment of certain amounts for unused paid leave during his employment with Zoomcar, along with certain compensation he claims to be owed under the terms of his Employment Agreement, “Owed Severance” equal to approximately $72,000. In total, Mr. Moran seeks damages of at least $238,000 plus damages associated with the 8% of shares. He also seeks damages under the New York Labor Law, under which he seeks liquidated damages equal to 100% of any unpaid wages. He claims that all of the above constitute wages under New York Labor Law.
Zoomcar believes that the termination of Mr. Moran’s employment for cause was proper in accordance with the terms of his Employment Agreement. Mr. Moran’s case in the District Court was dismissed on account of Mr. Moran’s stated intention to refile the case in Delaware Superior Court. Mr. Moran refiled his lawsuit in the Superior Court of the State of Delaware on November 1, 2024. On November 27, 2024, the Company filed a motion to dismiss certain of the causes of action for failure to state a cause of action, and the briefing on that motion was filed on January 7, 2025. Mr. Moran filed opposition to Zoomcar’s motion on February 5, 2025 and Zoomcar filed a reply in further support of its motion on February 20, 2025.Zoomcar’s oral arguments in its motion to dismiss were heard on April 29, 2025. The Court has requested additional briefing with respect to the Company’s motion to dismiss Mr. Moran’s Wage claim. The additional briefing is due on August 15, 2025. The court granted the motion to dismiss Mr. Moran’s quasi-contractual claims and reserved decision on the balance of the motion. Zoomcar believes the allegations are without merit, intends to defend them vigorously and expects to prevail either at the motion stage or at a hearing on the merits. However, there can be no assurance that the Company will be successful in defending these claims in its entirety and such efforts may be time-consuming, costly and may have reputational and other negative effects on Zoomcar.
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ACM has filed a notice of motion for summary judgement in lieu of complaint against Zoomcar in New York courts for payment of amounts due under the Note pursuant to breach of the terms of a note
The Company received two default notices from ACM. The first notice was issued on May 22, 2024 which stated that the Company is in default of the terms of the Unsecured Convertible Note issued to ACM on December 28, 2023, since the Company had entered into an equity line arrangement with White Lion Capital LLC, a variable rate transaction, without the prior consent of ACM. Further, on June 25, 2024, the Company received the second notice of default from ACM stating that the Company has incurred indebtedness in the form of $3,600,000 in principal amount of notes in a transaction involving Aegis Capital Corp. acting as the placement agent, prior to which, the consent of ACM was not obtained. As per the terms of the ACM note, in the event of any default, all accrued but unpaid interest plus liquidated damages and other amounts thereof, shall become immediately due and payable in cash.
On November 7, 2024, ACM filed a notice of motion for summary judgement in in lieu of complaint (“Motion”) against Zoomcar in New York State Supreme Court, New York County, alleging it was entitled to accelerated payment of $5,997,832.72 pursuant to the terms of an unsecured promissory note issued by Zoomcar to ACM on December 28, 2023 (“Note”) as consideration for certain alleged, bona fide expenses that ACM’s members had aggregated and assigned to ACM for collection from Zoomcar. As alleged by ACM in its moving papers, two “Events of Default” (as defined in the Note) had occurred thereby entitling ACM to full and accelerated payment of the Note. The first was a Form 8-K, filed by Zoomcar on May 9, 2024, which allegedly disclosed that on May 6, 2024, Zoomcar had entered into an equity line arrangement and “Variable Rate Transaction” (as defined in the Note) with White Lion Capital LLC (“White Lion”). The second was a Form 8-K, filed by Zoomcar on June 21, 2024, which allegedly disclosed that on June 18, 2024, Zoomcar had incurred a form of debt that was not “Excluded Debt” (as defined in the Note) arising from its placement agent agreement with Aegis Capital Corp. without ACM’s prior consent. The Note generally provides that, upon the occurrence of an Event of Default, all accrued but unpaid interest plus liquidated damages and other amounts thereof shall become immediately due and payable to the Note holder.
As such, on January 14, 2025, Zoomcar filed opposition to the Motion. In relevant part, Zoomcar challenged the fact allegations concerning: (i) the first Form 8-K by tendering to the Court evidence confirming that the subject transaction with White Lion in fact had been terminated and the underlying filing of a Form S-1 registration statement contemplated in that transaction was never effectuated; and (ii) the second Form 8-K by tendering to the Court evidence confirming that the subject transaction involved Excluded Debt. The effect of the foregoing is the transactions were excluded from the definitions of Events of Default and extinguished ACM’s alleged entitlement to accelerated payment under the Note. Additional defenses were also presented by Zoomcar to the Motion. On March 28, 2025, New York County Supreme Court Justice granted a summary judgment in favor of ACM in the amount of $5,656,086.72, as well as default interest in the amount of $346,481.00, post-judgment interest at the statutory rate, attorneys’ fees, and costs. The issue of attorneys’ fees was referred to a special referee to report and recommend on submission from the parties. On April 22, 2025, the Company filed a Notice of Appeal seeking to reverse the March 28, 2025, order granting summary judgment in favor of ACM. On May 9, 2025, the Court reduced the award of attorneys’ fees and costs to $12,000.00. Based on the foregoing, on July 1, 2025, the Clerk of the Court entered two (2) money judgments against the Company for the underlying liability and attorneys’ fees: $5,997,832.72 and $12,000.00. On July 29, 2025, the Company filed Notices of Appeal seeking to reverse both money judgments in favor of ACM. The Company will continue to vigorously prosecute its appeals.
However, there can be no assurance that the Company will be successful in its appeal or in resolving these claims in its entirety, and such efforts may be time-consuming, costly and may have reputational and other negative effects on Zoomcar.
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Our entering into a settlement with ACM could result in a breach of standstill provisions in agreements we entered into in connection with the investors in the November Offering
We have in the past and may continue in the future to negotiate a settlement of a claim against us by ACM, the terms of which could breach certain restrictive covenants in the securities purchase agreements we entered into with investors, and the Placement Agent Agreement we entered into with the Placement Agent, each in connection with the November Offering. These restrictive covenants prohibit us, subject to certain exceptions, from issuing additional shares of Common Stock or securities convertible into or exercisable for shares of Common Stock (“Common Stock Equivalents”), and from filing any registration statements to register for resale any of such securities, without the consent of the investors, who were issued 50.1% of the securities issued in the November Offering, and the Placement Agent. Since we expect to issue shares of Common Stock and Common Stock Equivalents to ACM, in connection with any settlement, and to register such shares of Common Stock and shares of Common Stock underlying Common Stock Equivalents for resale in one or more registration statements, such actions could result in a breach of these restrictive covenants and we could be liable for damages to the investors in the November Offering, and the Placement Agent, which could have a material adverse effect on our financial situation and operations.
If the pre-programmed IoT devices distributed to our Hosts to affix to registered cars, which IoT devices enable GPS tracking and data collection by Zoomcar and keyless, digital access to booked vehicles by Guests, do not function as they are intended to function, our business, financial condition, and results of operations could be adversely affected.
As part of our vehicle registration process, all Hosts are provided with an option to install a variety of customized software-enabled IoT devices These devices, which Zoomcar obtains from several suppliers and then programs prior to distribution to Hosts, serve multiple functions, including enabling Guests to access Host vehicles by digitized keyless access and start and end bookings using Zoomcar’s mobile app. The IoT devices also facilitate GPS monitoring by Zoomcar of in-trip vehicles, which serves a data collection function that is important to Zoomcar.
We have no control over the quality or functionality of the IoT devices distributed to Hosts and such devices may not function as intended or may be out of service during the course of a booking or while a Guest is attempting to access a booked vehicle. In such scenarios, Guests are able to contact Hosts via number masking call or text chat enabled by Zoomcar Guest App. However, failures to provide the seamless keyless functions may deny or delay Guests’ quick access to the vehicles, thus reducing Guests’ interest in utilizing our platform. Hosts, in turn, may rely on Zoomcar’s customer support functionality to facilitate connecting Guests to emergency services in the event of a vehicle accident or other situation that, if unresolved, could result in damage to a Host vehicle. If Zoomcar is unable to help Guests that encounter problems during bookings, it could result in complaints and negative reviews from both Hosts and Guests, and higher incidents of damages claims to Zoomcar by Hosts, leading to adverse consequences to our reputation, brand, business, prospects, and operating results.
We do not have long term contracts with the third-party suppliers of the IoT devices distributed to our Hosts and such suppliers can reduce quantities or terminate their sales of IoT devices to us at any time. Any adverse changes in such supply or the costs of such products or services may adversely affect our operations.
We collaborate with third-party suppliers who regularly provide products and services, including but not limited to IoT devices and software integrations, to us. We do not have long term purchase agreements in place with our current suppliers of the IoT devices that we program and advise our Hosts to install in the vehicles that they register to our platform and our suppliers could reduce the quantity of or discontinue providing IoT devices suitable for our needs. Given that the Hosts now have an option to install/not install these devices, we do not currently anticipate material challenges to identifying replacement suppliers if shortages of IoT devices occur, we are reliant on third parties to provide such devices and unanticipated shortages or an inability to identify new suppliers if our existing suppliers cease to be willing or able to provide the IoT devices on terms and at costs acceptable to Zoomcar may occur. Any such shortages, reductions, or terminations in IoT device supply arrangements may indirectly lead up to an adverse impact on our revenues, profits, and financial condition. Additionally, if the market prices for IoT devices that are suitable for our needs goes up, we may need to purchase the devices at a comparatively higher price, which may adversely affect our business, financial condition and results of operations.
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We have limited control over the operations of our suppliers and other business partners and any significant interruption in their operations may have an adverse impact on our operations. For example, a significant interruption in the operations of our supplier’s production facilities could cause delay or termination of shipment of the IoT devices to us, which may, in turn, reduce or delay our ability to pre-program and distribute such devices to Hosts which may in turn affect the retention of Hosts who are more inclined towards installing the devices leading to a lower availability of inventory on our Platform.
As our operations continue to scale and grow, we anticipate needing an increased number of IoT devices, and our demand therefore may exceed the capabilities of our existing suppliers. If our suppliers cease to supply adequate numbers of IoT devices to us, or if we need alternative sources of supply for any other reason, those devices may not be immediately available to us. If alternative suppliers are not immediately available, we will have to identify and qualify alternative suppliers, and the installation of such devices on vehicles which Hosts wish to add to our platform may be delayed. We may not be able to find adequate alternative or additional suppliers in a reasonable period of time or on commercially acceptable terms, if at all. An inability to obtain sufficient supply of IoT devices which we can program for platform use may delay installation of such devices on vehicles that would otherwise become registered or more promptly registered to our platform, harm our relationships with Hosts, which could adversely affect our business and operations.
Maintaining and enhancing our brand and reputation is critical to our business prospects. While we have taken significant steps to build and improve our brand and reputation, failure to maintain or enhance our brand and reputation will cause our business to suffer.
As our platform continues to scale and becomes increasingly interconnected, resulting in increased media coverage and public awareness of our brand, future damage to our brand and reputation could have an amplified effect on our platform offerings. Our brand and reputation may also be harmed by events outside of our control, including by perceptions of our business or our platform which are subjective in nature. For example, if Hosts misrepresent the features or safety of their vehicles in platform listings or otherwise provide diminished quality of vehicles, Guests may not have positive experiences with bookings and may not return to the platform for future transportation needs. If Guests, in turn, do not treat Host vehicles with care, engage in reckless driving or other malfeasance during booked trips or violate platform terms and conditions or use Host vehicles in the commission of crimes or illegal acts, their actions could cause Hosts to withdraw vehicles from our platform or pursue damages claims against Zoomcar. Events ranging from unanticipated litigation involving Zoomcar to trip cancellations by Guests may affect perceptions of our business by individual Hosts and Guests or of larger numbers of persons or groups of persons about our platform and the perceived benefits or risks to booking cars through our platform. Because our ratings and review system encourage and facilitates public sharing of Hosts’ and Guests’ experience with bookings and with our platform, platform users have a forum to express describe their individual, subjective experiences with Host vehicles, bookings, and any other aspect of our business, which may not always be favorable. Although we monitor usage of our platform review and ratings systems, we cannot control behaviors of our customers and from time to time platform features designed to encourage productive information sharing may lead to dissemination of information which is misleading, misrepresentative, false and which may be damaging to our reputation. Any of the foregoing, among other facts and circumstances, may result in unfavorable press coverage about Zoomcar and our reputation and, consequently, our business may be harmed.
The acceptance of our brand will depend partially on maintaining a good reputation, minimizing the number of safety incidents, continuing an improved culture and workplace practices, improving existing functions, feature, and technologies, developing new functions, features and technologies of our platform, maintaining a high quality of customer service and ethical behavior and continuing our marketing and public relations efforts. Our brand promotion, reputation building, and media strategies involve and will continue to involve significant costs yet may not be successful. We anticipate that other competitors and potential competitors will scale and expand their business, which will make maintaining and enhancing our reputation and brand increasingly more difficult and expensive. If we fail to successfully maintain our brand in the current or future competitive environment or if events occur in the future which negatively affect public perception of our Company, our brand and reputation would be further damaged, and our business may suffer.
The impact of adverse or changing economic conditions, including the resulting effects on consumer spending or mobility patterns, may adversely affect our business, financial condition, and results of operations.
Our business depends on the overall demand for vehicle bookings. Any significant weakening of the economy in our operating jurisdictions or of the global economy, including the current macroeconomic downturn, more limited availability of credit, economic uncertainty, inflation, financial turmoil affecting the banking system or financial markets, increased unemployment rates, restrictions and reduction in domestic or international travel, fluctuations in the price or availability of gasoline, and other adverse economic or market conditions may adversely impact our business and operating results. Global economic and political events or uncertainty may cause some of our current or potential Hosts and Guests to curtail their use of our platform. In addition, travel has been disproportionately impacted by a macroeconomic downturn. In response to such downturns, Hosts and Guests may not use or spend on our platform at rates we expect, thus further reducing demand for vehicle bookings. These adverse conditions have in the past resulted, and could in the future result in, reductions in consumer spending, slower adoption of new technologies, and increased competition. We cannot predict the timing, strength, or duration of any economic slowdown, including the current macroeconomic downturn, or any subsequent recovery generally. In addition, increases in inflation may cause Guests to decrease travel or choose alternative or lower cost methods of transportation versus utilizing our platform. If the conditions in the general economy significantly deviate from present levels and continue to deteriorate as a result of any such macroeconomic downturns, our business, financial condition, and results of operations could be adversely affected.
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Increases in, labor, energy, and other costs could adversely affect our operating results.
Factors such as inflation, increased labor and employee benefit costs, and increased technology upgrade and updated costs, as well as other inflationary pressure, may increase our operating costs. Many of the factors affecting such costs are beyond our control cause these increased costs may cause us to pass costs on to Hosts and Guests by increasing certain fees paid by them to us, which may cause booking volume to decline, which would harm our business and operating results.
Our operations have grown substantially since our inception, and we expect that they will continue to do so, subject to our financial condition. If we are unable to effectively manage that growth, our financial performance and future prospects will be adversely affected.
Since our inception, we have experienced significant growth in the scale of our operations. This expansion increases the complexity of our business and places significant strains on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. We may not be able to manage growth effectively, which could damage our reputation, limit our growth, increase our costs, and negatively affect the results of our operations. Our business is becoming increasingly complex, and this complexity and our rapid growth have demanded, and will continue to demand, substantial resources and attention from our management.
Further, to accommodate our expected growth, we must improve and maintain our platform, technology, systems, and network infrastructure. Failure to effectively upgrade our technology or network infrastructure to support the expected increased traffic on our platform could result in unanticipated system disruptions, slow response times, or poor experiences for Hosts and Guests. To manage the expected growth of our operations and to support financial reporting requirements, we will need to improve our transaction processing and reporting, operational and financial systems and reporting, procedures, and controls. These improvements will be particularly challenging to realize if we acquire new operations with different systems or if we continue to rely on manual financial reporting practices. Our current and planned personnel, systems, procedures, and controls may not be adequate to support our future operations. If we are unable to expand our operations, improve our financial reporting processes, and hire additional qualified personnel in an efficient manner, it could adversely affect our business, customer and investor satisfaction, compliance with regulations and laws, and cause our expenses to grow disproportionately relative to our revenue, and our financial performance and future prospects will be adversely affected.
Breaches and other types of security incidents of our networks or systems similar to the recent Cybersecurity Incident, or those of our third-party service providers, could negatively impact our business, our brand and reputation, our ability to retain existing Hosts and Guests and attract new Hosts and Guests, may cause us to incur significant liabilities and adversely affect our business, results of operations, financial condition, and future prospects.
In the regular course of our business, we collect, use, store, transmit, and process data and information about Hosts, Guests, employees, and others, some of which may be sensitive, personal, or confidential and make us an attractive target and potentially vulnerable to cyberattacks, computer viruses, electronic break-ins or similar disruptions. Recently on June 9, 2025, the Company identified a Cybersecurity Incident involving unauthorized access to its information systems. The Company became aware of the incident after certain employees received external communications from a threat actor alleging unauthorized access to Company data. Upon discovery, the Company promptly activated its incident response plan. Although based on its initial assessment the Company determined that an unauthorized third party accessed a limited dataset containing certain personal information of a subset of approximately 8.4 million users, including names, phone numbers, car registration numbers, personal addresses and email addresses associated with such users, it found no evidence to suggest that financial information, plaintext passwords, or other sensitive identifiers were compromised. To date, the incident has not resulted in any material disruption to the Company’s operations.
Accordingly, any such unauthorized access to or use of such data and information, or breach of our security measures or those of our third-party service providers, could adversely affect our business, operations, and future prospects. While we have taken steps to mitigate our cyberattack risks and protect the confidential information that we have access to, including but not limited to installation and periodical updates of antivirus software and backup of information on our computer systems, our security measures may be vulnerable to such security breaches. In response to the Cybersecurity Incident, the Company took immediate actions to contain the threat and enhance its security posture. These measures include implementing additional safeguards across the cloud and internal network, increasing system monitoring, and reviewing access controls. The Company is also engaging with third-party cybersecurity consultants to have an external cybersecurity assessment in order to further strengthen its infrastructure and cybersecurity framework.
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Even though the Company has taken the relevant steps to ensure that such breach does not occur again, because techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Any cybersecurity incident like the one we recently experienced, accidental or willful security breaches or other unauthorized access to our systems could cause confidential information to be stolen and used for criminal purposes. Cybersecurity incidents, security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with our Hosts and Guests could be severely damaged, we could incur significant liability, and our business and operations could be adversely affected. Additionally, if we fail to protect confidential information, we may be susceptible to potential claims such as breach of contract, negligence or other claims. Such claims will require significant time and resources to defend and there can be no assurances that favorable final outcomes will be obtained.
An increasing number of organizations, including large online and offline merchants and businesses, other large Internet companies, financial institutions, and government institutions have disclosed breaches of their information security systems and other information security incidents, some of which have involved sophisticated and highly targeted attacks. In addition, users on our platform could have vulnerabilities on their own mobile devices that are entirely unrelated to our systems and platform, but which could mistakenly be attributed to us and our system and platform. Further, breaches experienced by other companies may also be leveraged against us. For example, credential stuffing and ransomware attacks are becoming increasingly common, and sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent. Certain efforts may be state-sponsored or supported by significant financial and technological resources, making them even more difficult to detect. If a third party or employee circumvents any of our security measures or those of our third-party service providers, they may access, misappropriate, delete, alter, publish, or modify this information, which could cause interruptions in our business and operations, fraud or loss to third parties, regulatory enforcement actions, litigation, indemnity obligations, competitive harm, and other possible liabilities, as well as negative publicity. Widespread negative publicity may also result from real, threatened, or perceived security compromises (or lack of adequate security measures) of our industry, competitors, Hosts, and Guests. Concerns regarding privacy and data security could cause some Hosts and Guests to stop using our services, and for employees to be less satisfied with their employment with us and potentially leave the Company or institute claims against us. This discontinuance in use and the potential failure to acquire new Hosts and Guests, and similar personnel issues, could substantially harm our business, results of operations, financial condition, and future prospects.
Our information technology systems, internal computer systems, cloud-based computing services, and those of our current and any future third-party service providers are vulnerable to interruption and intrusion. Cyberattacks and other malicious internet-based activity, such as insider threats, computer malware, hacking, and phishing attempts continue to increase. Any cybersecurity incident or material disruption or slowdown of our systems could cause outages or delays in our services, which could harm our brand and adversely affect our operating results. Our failure to implement adequate cybersecurity protections could subject us to claims for any breach of security, particularly if it results in disclosure of information relating to our Hosts or Guests. If changes in technology cause our systems to become obsolete, or if our systems are inadequate to facilitate our growth, we could lose Hosts or Guests, and our business and operating results could be adversely affected. From time to time, and especially in 2025, we have experienced security incidents or attempted attacks, and in some instances, individuals have had their personal information compromised. We conduct investigations when we become aware of such incidents and/or attempted attacks (although our investigations may not be able to determine the method of attack) and may notify affected persons, as necessary. In addition to traditional computer “hackers” employing malicious code (such as viruses, worms, and ransomware) to breach our systems and platform, we are susceptible to and monitor for social engineering, cyber extortion, and personnel theft or misuse.
We may also be the subject of denial-of-service attacks, server malfunction, software or hardware failures, loss of data or other computer assets, adware, or other similar issues. Threat actors, nation states, and nation state-supported actors engage in cyberattacks, including for geopolitical reasons, continued opportunistic monetary reasons, and in connection with military conflicts and operations. During times of war and other major conflicts, we and our third-party service providers may be vulnerable to these attacks, including cyberattacks that could materially disrupt our systems, platform, and operations. While we have security measures in place to protect customer information and prevent data loss, service interruption, and other security breaches, we cannot guarantee that our security measures or our third-party service providers’ security measures will be sufficient to protect against unauthorized access to, or other compromise of, personal information, confidential information, or proprietary information or of disruptions or damage to our systems. The techniques used to sabotage or to obtain unauthorized access to our platform, systems, networks, and/or physical facilities in which data is stored or through which data is transmitted change frequently, and we may be unable to anticipate such techniques or implement adequate preventative measures or stop security breaches that may arise from such techniques. As a result, our safeguards and preventive measures may not be adequate to prevent current or future cyberattacks and security incidents, including security breaches that may remain undetected for extended periods of time, which can substantially increase the potential for a material and adverse impact resulting from the breach.
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We are required to comply with laws, rules, industry standards, and regulations that require us to maintain the security of personal information in India. We may also have contractual and other legal obligations to notify relevant stakeholders of security breaches. Failure to prevent or mitigate cyberattacks could result and has in the past resulted in unauthorized access to such data, including personal information. India has enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain types of data. In addition, our agreements with certain partners may require us to notify them in the event of a security breach. Such disclosures are and could be costly, could lead to negative publicity, may cause Hosts and Guests to lose confidence in the effectiveness of our security measures and to not use our services, and may require us to expend significant capital and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach. In addition, the costs to respond to a cybersecurity event or to mitigate any identified security vulnerabilities could be significant, including costs for remediating the effects of such an event, paying a ransom, restoring data from backups, and conducting data analysis to determine what data may have been affected by the breach. In addition, our efforts to contain or remediate a security breach or any system vulnerability may be unsuccessful, and our efforts and any related failures to contain or remediate any breach or vulnerabilities could result in interruptions, delays, loss in customer trust, harm to our reputation, and increases in our insurance premiums.
We do not currently have insurance coverage for security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees, and other impacts that arise out of incidents or breaches. While we may obtain cyber liability insurance in the future, we cannot assure you that such insurance coverage will adequately cover liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. The successful assertion against us of one or more large claims that exceeds available insurance coverage, or that results in changes to insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), could have an adverse effect on our business. Our risks are likely to increase as we continue to expand, grow our Host and Guest base, and process, store, and transmit increasingly substantial amounts of confidential, proprietary, and sensitive data.
We face competition and could lose market share to competitors, which could adversely affect our business, financial condition, and operating results.
We face and expect to continue to face competition from ride sharing companies, car rental and taxi companies. The car sharing market in particular is intensely competitive and is characterized by rapid changes in technology, shifting guest needs and preferences, and frequent introductions of new services and offerings. We expect competition to increase, both from existing competitors and new entrants in the markets in which we operate or plan to operate, and such competitors may be well-established and enjoy greater resources or other strategic advantages. If Zoomcar is unable to anticipate or successfully react to these competitive challenges in a timely manner, Zoomcar’s competitive position could weaken, or fail to improve, and Zoomcar could experience a decline in revenue or growth stagnation that could adversely affect Zoomcar’s business, financial condition, and operating results.
Certain of our current and potential competitors may have greater financial, technical, marketing, research and development skills and other resources, greater name recognition, longer operating histories, or a larger global user base than we do. Such competitors may be able to devote greater resources to the development, promotion, and sale of offerings, and they may be able to offer lower prices in certain markets than we do, which could adversely affect our business, financial condition, and operating results. These and other factors may allow our competitors to derive greater revenue and profits from their existing user bases, attract and retain Hosts and Guests at lower costs or respond more quickly to new and emerging technologies and trends. Current and potential competitors may also establish cooperative or strategic relationships, or consolidate, amongst themselves or with third parties, which may further enhance their resources and offerings relative to ours.
We believe that our ability to compete effectively depends upon many factors both within and beyond our control, including but not limited to:
| ● | acceptance of car-sharing and the use of our platform to solve transportation needs in the emerging markets in which we operate; |
| ● | our ability to attract and retain Guests and Hosts to use our platform; |
| ● | the popularity and perceived utility, ease of use, performance, and reliability of our platform; |
| ● | our brand strength and recognition; |
| ● | our pricing models and the prices of our offerings; |
| ● | our ability to manage our business and operations during a pandemic and related travel restrictions if and when imposed upon outbreak of a pandemic; |
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| ● | our ability to continue developing platform features which appeal to changing customer preferences; |
| ● | our ability to continue leveraging and enhancing our data collection and analytics capabilities; |
| ● | our ability to establish and maintain relationships with strategic partners and third-party suppliers or providers; |
| ● | changes mandated by legislation, regulatory authorities, or litigation, including settlements, judgments, injunctions, and consent decrees, as well as changes that we may elect to make ourselves in the face of potential litigation, legislation, or regulatory scrutiny; |
| ● | our ability to attract, retain and motivate talented employees; and |
| ● | our ability to raise additional capital. |
If we are unable to compete successfully, our business, financial condition and operating results could be adversely affected.
We rely on mobile operating systems and application marketplaces to make its platform available to Hosts and Guests, and failure to effectively operate with or receive favorable placements within such application marketplaces could adversely affect Zoomcar’s business, financial condition, and operating results.
We depend in part on mobile operating systems, such as Android and iOS, and their respective app marketplaces, to make our app available to Hosts and Guests. Any changes in such systems and app marketplaces that degrade the functionality or popularity of our app could adversely affect our platform’s usage on mobile devices and may adversely affect our user ratings and reviews in app marketplaces. If such mobile operating systems or app marketplaces limit or prohibit us from making our app available to Hosts and Guests, or if such systems or marketplaces make changes that degrade the functionality of our app, slow the rollout of our app on other app marketplaces, increase the cost of using our app, impose terms of use that are unsatisfactory to us, require users to opt in to enable marketing or advertising features, or modify their search or ratings algorithms in ways that are detrimental to us, our Guest growth may be negatively affected. Any of the foregoing risks could adversely affect our business, financial condition, and results of operations.
Our business depends on attracting and retaining capable management, technology development and operating personnel.
Our success depends in large part on our ability to attract and retain high-quality management, technology development and operating personnel. Competition for qualified employees is intense in our industry. There can be no assurance that members of our management team will continue to work for Zoomcar, or that we will be able to continue to attract or retain employees focused on technology development or other important aspects of our business and operations. Our employees, including members of our management team, could leave our Company with little or no prior notice and would be free to work for a competitor. The loss of even a few qualified employees, or an inability to attract, retain, and motivate additional highly skilled employees required to carry out our business plans, could harm our operating results and impair our ability to grow. If we were to lose key members of our management or technology teams, we would need to replace them with qualified individuals in a timely manner or else our business, results of operations and financial condition could be adversely impacted. Additionally, certain of our executive officers and directors may allocate their time to other businesses, thereby causing potential conflicts of interests which could have a negative impact on our business operations.
We also do not maintain “key person” life insurance on any of our employees. The departure of one or more of our senior management team members or other key employees could be disruptive to our business until we are able to hire qualified successors.
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To attract and retain key personnel, we use various measures, including an equity incentive program for key executive officers and other employees. These measures may not be enough to attract and retain the personnel we require to operate and grow our business effectively. If we fail to identify, hire, train, and retain qualified management or technology personnel in the future, it may materially and adversely affect our business, financial condition, results of operations and prospects.
We are subject to payment-related risks.
We accept payments using a variety of methods, including credit or debit cards, or digital payment alternatives like UPI or other specific digital wallet platforms. As our payment policies are subject to change from time to time in accordance with evolving legal requirements and market availability of mobile and other payment systems in the jurisdiction where we operate, we offer new payment options to Hosts and Guests from time to time, subject to additional regulations, compliance requirements, and fraud risks. For certain payment methods, including credit and debit cards, we pay interchange and other fees that may increase over time and may increase our operating costs and lower profitability.
We rely on third-party payment processors to process payments, refunds, and reimbursements. Under our commercial agreements with these third parties, they may terminate the relationships with us at any time in their sole discretions. If one of these third parties terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we could incur substantial delays and expenses in locating and integrating an alternative payment service provider to process payments from Hosts and Guests, and the quality and reliability of any such alternative payment service provider may not be comparable. Further, the software and services provided by these third parties may not meet our expectations, may contain errors or vulnerabilities, and could be compromised or experience outages. Additionally, payment processing software is complex and involves automated processes implemented by us and the third parties that we engage. Therefore, the payment processing software can be misinterpreted and may be susceptible to errors. These risks could cause us, to lose our ability to accept and account for online payment or other payment transactions, make timely payments to Hosts, or result in over- or underpayments to Hosts, any of which could disrupt our business for an extended period of time, make our platform less convenient and attractive to users, expose user information to unauthorized disclosures and abuse, and adversely affect our ability to attract and retain Hosts and Guests, or materially adversely affect our business, financial condition, ability to forecast accurately, and results of operations.
If we are unable to maintain our chargeback or refund rates at levels that credit or debit card issuers, or payment processors deem acceptable, these entities may increase fees for chargeback transactions or for many or all categories of transactions; they may also increase the rates of declining transactions or terminate their relationships with us. Any increases in fees could adversely affect our operating results, particularly if we elect not to raise the prices for transactions on our platform to offset the increase. The termination of our ability to process payments on any major credit or debit cards or through certain online payment service providers or payment processors could significantly impair our ability to operate our business.
We may also be subject to, or may voluntarily comply with, a number of other laws and regulations relating to money laundering, money transmission, international money transfers, privacy and information security, and electronic fund transfers. If we are found to be in violation of such applicable laws or regulations, we could be subject to civil and criminal penalties or forced to cease our payments processing services or otherwise make changes to our business practices.
Any major disruption or failure of our information technology systems, or our failure to successfully implement new technology effectively, could adversely affect our business and results of operations or the effectiveness of internal controls over financial reporting.
We rely on various information technology systems, owned by us and third parties, to manage our operations. Over the last several years, we have been and continue to implement modifications and upgrades to our systems, including making changes to legacy systems, replacing legacy systems with successor systems with new functionality, and acquiring new systems with new functionality. These activities subject us to inherent costs and risks associated with replacing and upgrading these systems, including impairment of our ability to fulfil trip bookings, maintain books and records, potential disruption of our internal control structure, substantial capital expenditures, additional administration and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time, and other risks and costs of delays or difficulties in transitioning to new or upgraded systems or of integrating new or upgraded systems into our current systems. Our system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. In addition, the difficulties with implementing new or upgraded technology systems may cause disruptions in our business operations and may have an adverse effect on our business and operations if not anticipated and appropriately mitigated.
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The successful operation of our business depends upon the performance and reliability of internet, mobile, and other infrastructures that are not under our control.
Our business depends on the efficient, uninterrupted, and reliable operations of internet, mobile, and other infrastructures that are not under our control. We may operate in certain geographic areas with limited internet connectivity. Internet access and access to a mobile device are frequently provided by companies with significant market power, which could result in corporate action that degrades, disrupts, or increases the cost of users’ ability to access our platform. Failure to effectively upgrade our technology or internet infrastructure to support the expected increased utilization of our platform by larger numbers of Hosts and Guests could result in unanticipated system disruptions, slow response times, or poor experiences for Hosts and Guests. In addition, the internet infrastructure that we and users of our platform rely on in any particular geographic area may be unable to support the demands placed upon it. Any such failure in internet or mobile device or computer accessibility, even for a brief period of time, could interfere with the speed and availability of our platform. In addition, we have no control over the costs of the services provided by national telecommunications operators. If mobile internet access fees or other charges to internet users increase, consumer traffic may decrease, which in turn may cause our revenue to significantly decrease. If our platform is unavailable when users attempt to access it, or if our platform does not load as quickly as users expect, Hosts and Guests may not return to our platform as often in the future, or at all, and may use our competitors’ products, services, or offerings more often. Although we have attempted to prepare for contingencies through redundancy measures and disaster recovery plans, such preparation may not be sufficient, and we do not carry business interruption insurance. Despite any precautions we may take, the occurrence of a natural disaster, such as an earthquake, flood or fire, or other unanticipated problems in the jurisdictions where we operate, including power outages, telecommunications delays or failures, break-ins to our systems or computer viruses, could result in delays or interruptions to our platform, our app and website, and loss of data and business interruption for us and our Hosts and Guests. Any of these events could damage our reputation, significantly disrupt our operations, and subject us to liability, which could materially and adversely affect our business, financial condition, and results of operations.
Our business operations may result in losses for which we are not insured.
Our current business model consists of a peer-to-peer car-sharing platform which facilitates sharing of vehicles between Hosts and Guests. In this context, we are a facilitator of vehicle bookings but disclaim legal responsibility for cars owned by Hosts and for actions by Hosts and Guests on our platform and during bookings. Our platform terms and conditions, inform the Hosts and Guests that booking, sharing, and using cars through the platform is undertaken at their own risk; the lease agreement entered into between Hosts and Guests prior to each booking that occurs in India also disclaims our responsibility for Host and Guest property and for other damages incurred in relation to bookings. We also include in our platform terms and conditions a limit on our overall liability equal to the greater of the booking value of each trip and $120. However, we cannot be certain of the extent to which such disclaimers and limitations would be upheld as legally enforceable in every jurisdiction or circumstance. We regularly receive communication from Hosts (and from time to time, Guests) asserting that we are responsible, and requesting reimbursement for damages to vehicles, lost property and other losses. All of our Guests pay a “value added” trip protection fee as part of a booking, however, the amount available to us from Guest trip protection fees is not sufficient to offset the amounts requested to cover the cost of all damages claims, nor do we attempt to offset all such requests to cover vehicle damage. As a result, we often remain at risk of residual claims that we may have to absorb in the absence of third-party insurance. For further information regarding the trip protection fees and related matters, please review information contained in this 10-Q under the heading “Item 1 Legal Proceedings - Other Matters.”
Further, we currently do not carry any insurance to protect against third-party damage claims tied to death, personal injury, or Guest or Host theft or other losses, or third-party property damage. Although Hosts may insure their own vehicles to varying extents and are required to do so by law or opt for trip insurance covers offered by our insurance partner in certain selective locations and for limited categories of host vehicle damages we do not carry out independent verification of Host insurance coverage, nor does Host vehicle insurance coverage, to the extent it exists, insulate us, in full or in part, from all types of damages claims or claims for third-party indemnification associated with damages. We may therefore be subject to claims of significant liability based on any of the foregoing or based on other events or circumstances which occur during a booking or relate in some other manner to our platform or our business. We do not maintain balance sheet reserves to cover costs of defending, disputing, adjudicating, satisfying, or settling any such claims if they are asserted against us and we may not be able to succeed in any such actions, should they materialize and be determined to result in liability to us. While we are currently in the process of identifying adequate and feasible insurance coverage for our business, there can be no guarantee that we will be able to obtain or expand the insurance coverage in the future, and even if we are able to obtain additional coverage, we may not carry sufficient insurance coverage to satisfy potential claims. As our business continues to grow, incidences of such claims may also increase and, unless we obtain insurance coverage for such matters, we may choose or be required to absorb larger parts of such uninsured claims to avoid becoming subject to legal proceedings that could be resolved against us, which could lead to business losses and adversely affect our business, financial conditions and results of operations. Should uninsured losses occur, they could adversely affect our business, results of operations and financial condition. Further, our being subject to claims of liability, we may be subject to negative publicity and incur additional expenses, which could harm our business, financial condition, and operating results.
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We are in the process of remediating identified material weaknesses in our internal controls and if we fail to remediate these weaknesses, or if we experience additional material weaknesses in the future, or otherwise fail to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act, we may not be able to accurately or timely report our financial condition or results of operations, or comply with the accounting and reporting requirements applicable to public companies, which may adversely affect investor confidence in the Company and the market price of our stock.
Zoomcar has identified certain material weaknesses in Zoomcar’s internal controls over financial reporting as more particularly described under “Item 4 Controls and Procedures” of this Quarterly Report on Form 10-Q. These material weaknesses have been recurring from prior reporting periods and remain unresolved as of the date of this filing. Based on the assessment performed as of March 31, 2025, we identified five material weaknesses in our internal control over financial reporting related to:
| (i) | Our controls over independent review and documentation of third-party advisors’ reports were not operating effectively. We rely on third-party advisors for assistance with the preparation of key schedules and financial statements. However, we failed to establish a consistent process for independently reviewing these third-party advisor documents before incorporating them into our financial statements. |
| (ii) | Our controls over financial reporting, specifically related to the inadequacy of our financial reporting policies and procedures, were not operating effectively. The Company lacks financial reporting policies and procedures that are commensurate with GAAP and SEC reporting requirements. |
| (iii) | Our controls over the financial statement close process do not provide sufficient evidence of review. |
| (iv) | Our resources are deficient in comprehensive knowledge and expertise pertaining to technical accounting and SEC reporting requirements. |
| (v) | Our controls were not adequately designed to provide sufficient documentation and review of the operating effectiveness of Information Technology General Controls (ITGC’) for information systems that are relevant to the preparation of the Company’s consolidated financials. Specifically, our user access controls were not adequately designed or implemented and our monitoring of ITGC controls was insufficient. |
In light of the aforementioned material weaknesses, our management has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the material weaknesses in our internal control over financial reporting, the Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cashflows for the periods presented in conformity with GAAP.
To address the above material weaknesses, management is undertaking the following remediation measures:
| (i) | We have been working with consultant to assist in the preparation and presentation of financial statements in accordance with US GAAP and PCAOB guidelines. Furthermore, we are putting a framework in place to properly manage the review and approval process of work prepared by our third-party advisors. |
| (ii) | We will work on scheduling training sessions on a quarterly basis to provide relevant USGAAP knowledge. In addition to this management would look to hire people with USGAAP knowledge to bridge the gap over the next few quarters. |
| (iii) | Management will be finalizing work commenced on developing accounting manuals, policies, and standard operating procedures in consultation with Deloitte, our external SOX consultants. |
| (iv) | We are designing and implementing additional review procedures within our accounting and finance department to provide more robust and comprehensive internal controls over financial reporting. |
| (v) | We have properly concluded that ITGC controls over SAP (our accounting software) are operating effectively as of March 31, 2025. We are in the midst of reviewing and implementing proper ITGC controls in all other areas relevant to the preparation of the Company’s financial statements. |
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We intend to continue to take steps to remediate the material weaknesses described above and further evolving our accounting processes. The actions we are taking are subject to ongoing executive management review and are also subject to the oversight of the Audit Committee. We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time. If we are unable to successfully remediate these material weaknesses, or if in the future, we identify further material weaknesses in our internal control over financial reporting, we may not detect errors on a timely basis and our consolidated financial statements may be materially misstated.
While the Company has identified the above mentioned remediation plans and is working on remediating these material weaknesses, no assurance can be made that the Company will be successful in remediating any or all of the material weaknesses within the requisite timelines.
We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting. Although we are required to disclose changes made in its internal controls and procedures on a quarterly basis, we will not be required to make our first annual assessment of its internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with the SEC.
To comply with the requirements of being a public company, we have undertaken various actions, and will need to take additional actions, such as implementing numerous internal controls and procedures and hiring additional accounting or internal audit staff or consultants. Testing and maintaining internal control can divert Zoomcar’s management’s attention from other matters that are important to the operation of Zoomcar’s business. Additionally, when evaluating Zoomcar’s internal control over financial reporting, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404. Investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Stock could be negatively affected if any of the following occurs: (i) we identify any material weaknesses in its internal control over financial reporting; (ii) we are unable to comply with the requirements of Section 404 in a timely manner; (iii) we assert that our internal control over financial reporting is ineffective; or (iv) our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting once we are no longer an emerging growth company. We could also become subject to investigations by the SEC, the stock exchange on which its securities are listed, or other regulatory authorities, which could require additional financial and management resources. In addition, if we fail to remedy any material weakness, our financial statements could be inaccurate, and we could face restricted access to capital markets.
If we do not adequately protect our intellectual property and our data, our business, results of operations, and financial condition could be materially adversely affected.
We rely on a combination of trademark, copyright, domain names, trade names and trade secret laws, international treaties, our terms of service, other contractual provisions, user policies, restrictions on disclosures, and confidentiality agreements with our employees and consultants to protect our intellectual property rights from infringement and misappropriation. We currently have 21 registered trademarks and 1 recent trademark application that has passed the formalities check and is now under further examination along with 3 trademarks at variance – refused, abandoned and opposed, 1 patent application published, 3 patent applications under the abandonment process, and 1 patent application withdrawn in India; and 7 domain names.
There is no assurance that our pending or future trademark, patent, and copyright applications will be approved. Furthermore, effective intellectual property protection may not be available in every country in which we intend to operate our business and some of the platform features and other customization of software that is important to our operations is not protected by registered intellectual property rights. There can be no assurance that others will not offer technologies, functions, features, or concepts that are substantially similar to ours and compete with our business, or copy or otherwise obtain, disclose and/or use our brand, platform features, design elements, our search-and-ranking algorithms and machine-learning and artificial intelligence-enhanced tools and capabilities or other information that we consider proprietary without authorization. We may be unable to prevent third parties from seeking to register, acquire, or otherwise obtain trademarks, copyrights or domain names that are similar to, infringe upon or diminish the value of our trademarks, copyrights, and our other proprietary rights. Third parties may obtain or misappropriate certain of our data through website scraping, robots, or other means to launch copycat sites, aggregate our data for their internal use, or to feature or provide our data through their respective websites, and/or launch businesses monetizing this data. While we routinely employ technological and legal measures in an attempt to divert, halt, or mitigate such operations, we may not always be able to detect or halt the underlying activities as technologies used to accomplish these operations continue to rapidly evolve.
If the protection of our proprietary rights and data is inadequate to prevent unauthorized use or misappropriation by third parties, the value of our brand and other intangible assets may be diminished and our competitors may be able to more effectively mimic our technologies, offerings, or features or methods of operations. Even if we do detect violations or misappropriations and decide to enforce our rights, litigation that may be necessary to enforce our rights may not be pursued by us, as it may be time-consuming and expensive, and divert our management’s attention. Additionally, a court of a competent jurisdiction may determine that certain of our intellectual property rights are unenforceable. If we fail to protect our intellectual property and data in a cost-effective and meaningful manner, our competitive standing could be harmed; our Hosts, Guests, other consumers, and corporate and community partners could devalue the content of our platform; and our brand, reputation, business, results of operations, and financial condition could be materially adversely affected.
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We have been, and may in the future be, subject to claims that we or others violated certain third-party intellectual property rights, which, even where meritless, can be costly to defend and could materially adversely affect our business, results of operations, and financial condition.
The internet and technology industries are characterized by significant creation and protection of intellectual property rights and by frequent litigation based on allegations of infringement, misappropriation, or other violations of such intellectual property rights. There may be intellectual property rights, including registered or pending patents, trademarks, and copyrights, and applications of the foregoing, held by others that they allege cover significant aspects of our platform, technologies, content, branding, or business methods. Moreover, companies in the Internet and technology industries are frequent targets of practicing and non-practicing entities seeking to profit from royalties in connection with grants of licenses.
We have received communications alleging unauthorized use of third-party trademarks in the past, and may receive in the future, communications from third parties, including practicing and non-practicing entities, claiming that we have infringed, misused, or otherwise misappropriated their intellectual property rights. Additionally, we have been, and may in the future be, involved in claims, suits, regulatory proceedings, and other proceedings involving alleged infringement, misuse, or misappropriation of third-party intellectual property rights, or relating to our intellectual property holdings and rights. Intellectual property claims against us, regardless of merit, could be time consuming and expensive to litigate or settle and could divert our management’s attention and other resources.
Claims involving intellectual property could subject us to significant liability for damages and could result in our having to stop using certain technologies, content, branding, or business methods found to be in violation of another party’s rights. We might be required or may opt to seek a license for rights to intellectual property held by others, which may not be available on commercially reasonable terms, or at all. Even if a license is available, we could be required to pay significant royalties, which would increase our operating expenses. We may also be required to develop alternative non-infringing technology, content, branding, or business methods, which could require significant efforts and expenses and make us less competitive. Any of these results could materially adversely affect our business, results of operations, and financial condition.
We may introduce new platform offerings or changes to existing platform offerings or make other business changes, including in areas where we currently do not compete, which could increase our exposure to patent, copyright, trademark, and other intellectual property rights claims from competitors, other practicing entities, and non-practicing entities. Any failure in maintaining, protecting, or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition, and results of operations.
Risks related to International, Regulatory and Legal Matters
Our business is subject to certain laws and regulations in the jurisdictions in which it operates, many of which are currently evolving, and the risk of unfavorable interpretations or failure to comply with such laws and regulations could harm Zoomcar’s business, financial condition and results of operations.
Our platform currently operates across 99 cities in India. We are subject to differing, and sometimes conflicting, laws and regulations in the various states in which we operate our business, which are evolving and may change from time to time, which may give rise to inconsistent or ambiguous interpretations among local, regional, or national laws or regulations applicable to our business. Compliance with laws and regulations of different states imposing varying standards and requirements is burdensome for businesses like ours, imposes added cost, increases potential liability to our business, and makes it difficult to realize business efficiencies and economies of scale.
Relative to India, which is the location of our headquarters, and the market where we currently have the largest number of bookings, we operate as an asset-light peer-to-peer carsharing business based on an interpretation of current legal and regulatory requirements. The operation of our business is informed by a regulatory framework which includes but is not limited to, the India Motor Vehicle Act, 1988 (“MVA”), which informs how we operate and the ways in which we promote our business. However, there can be no assurance that our interpretation of relevant Indian laws and regulations, including the MVA, is complete or correct, or that transportation authorities in India will interpret the MVA or other applicable regulations the same way that we do. In the event that the MVA or other applicable laws and regulations are interpreted in a manner unfavorable to us, we could become the subject of investigations and could potentially face fines, duties, judgments or other negative consequences, which could materially adversely affect our business and results of operations. Additionally, as our business continues to grow and evolve, laws and regulations will be amended to address the evolution of our business, resulting in new and unpredictable legal and regulatory obligations in emerging markets. It may be difficult for us to comply with the new laws and regulations that will be developed to address changes in our industry and business, and we cannot guarantee that we will be able to comply with such new laws and regulations. If our current or future business models are determined to be noncompliant with the national, regional, and local laws and regulations, we may be required to make costly adjustments to our business model, which could result in negative consequences, many of which may be outside of our control and impossible to predict.
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In addition to laws and regulations directly applicable to the peer-to-peer car sharing businesses, we are subject to laws and regulations governing other aspects of our business practices, including laws and regulations relating to use of the Internet, e-commerce, and electronic devices, as well as those relating to taxation, online payments, automobile-related liability, payments, consumer privacy and data protection, pricing, content, advertising, discrimination, consumer protection, protection of intellectual property rights, distribution, messaging, mobile communications, environmental matters, labor and employment matters, claims management, electronic contracts, communications, Internet access, securities and public disclosure, corruption and anti-bribery, and unfair commercial practices. In addition, climate change and greater emphasis on sustainability could lead to regulatory efforts to address the carbon impact of transportation and mobility, which could have a negative impact on our business.
In addition, the cities/states in which we have business operations may in the future enact new laws and regulations relating to emissions and other environmental matters associated with peer-to-peer car sharing operations, the peer-to-peer car sharing industry generally, and the operation of our business. The interpretation and enforcement of such laws may involve significant uncertainties. New laws and regulations that affect our existing and proposed future businesses may also be applied retroactively in ways that we cannot predict with certainty.
We cannot predict the effect that the interpretation of existing or new laws or regulations may have on our business. Any of the foregoing or similar occurrences or developments could significantly disrupt our business operations and restrict us from conducting a substantial portion of our business operations in these jurisdictions, which could adversely affect our business, financial condition, or operating results.
Any failure or perceived failure to comply with existing or new laws and regulations, including the ones described in these risk factors, or with orders of any governmental authority, including changes to or expansion of their interpretations, may subject us to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets or enforcement actions in one or more jurisdictions. This failure or perceived failure could also result in the imposition of additional compliance and licensure requirements on us, as well as increased regulatory scrutiny of our business. In addition, we may be forced to restrict or change our operations or business practices, make updates or upgrades of our platform, or delay planned launches or improvements of new features, functions, and technologies. Any of the foregoing could materially adversely affect our brand, reputation, business, financial condition, and results of operations.
Geographic areas in which Zoomcar operates and plans to operate in the future have been and may continue to be subject to political and economic instability.
We currently conduct all of our business operations in India (as of the date of this Form 10-Q, we have closed our operations in Vietnam, Indonesia and Egypt). Our growth strategy is premised on the rapid expansion of our platform into emerging markets. Several of the countries in which we plan to operate our business in the future may be, subject to instances of political instability, civil unrest, hostilities, terrorist activities and economic volatility. Any such events may lead to, among other things, declines in Host and Guest demand for our platform, whether arising from safety concerns, a drop in consumer confidence, a general deterioration of economic conditions, currency volatility, adverse changes to the political and regulatory environment, or otherwise. Any such developments and any other forms of political or economic instability in our markets may harm our business, financial condition, and operating results.
We are subject to risks associated with operating in rapidly evolving emerging markets.
To continue growing our business, we plan, in the future, to strengthen our operations and presence in India and to expand into other emerging markets, which may include, without limitation, markets in Southeast Asia, Middle East/North Africa, and Latin America. We have limited experience operating in jurisdictions outside India and plan to continue our efforts to expand into other jurisdictions. Business operations in multiple jurisdictions and markets is difficult, time consuming and expensive, and any international expansion efforts that we may undertake may not be successful. In addition, conducting international operations subjects us to risks associated with operating in emerging markets, including but not limited to the following:
| ● | operational and compliance challenges caused by distance, language, and cultural differences, including but not limited to the additional cost and resources required to localize our services, the translation of our mobile app, website and platform into foreign languages, and the adaptation of our operations to local cultures and practices, and any changes in such cultures and practices; |
| ● | unexpected and more restrictive laws and regulations, as amended from time to time, including those laws and regulations governing internet activities, peer-to-peer car sharing platforms, leasing or renting cars, insurance requirements, licensing and usage of vehicles, employment, tax, licensing and permitting, identify verification and screening, email and text messaging, collection and use of personal information, privacy and data protection, payment processing, currency regulation, auto insurance scores, or other third-party data sources for trust and safety screening purposes, and other activities important to our online business practices; |
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| ● | differing levels of technological compatibility with our platform and social acceptance of our brand and platform, and competition with companies that understand the local market better than we do or that have preexisting relationships with potential Hosts and Guests in those markets; |
| ● | legal uncertainty regarding our liability for the actions of Hosts and Guests, including uncertainty resulting from unique local laws or a lack of clear precedent of applicable law; |
| ● | dependency on third-party suppliers for the provision of essential business products/services including but not limited to IoT devices and software integrations in different jurisdictions. |
| ● | fluctuations in currency exchange rates; |
| ● | higher levels of credit risk and payment fraud; |
| ● | potentially adverse tax consequences, including the complexities of foreign value added tax systems and restrictions on the repatriation of earnings; |
| ● | increased financial accounting and reporting burdens, in addition to complexities and difficulties relating to the implementation and maintenance of adequate internal controls; |
| ● | difficulties in implementing and maintaining the financial systems and processes needed to enable compliance across multiple offerings and jurisdictions; |
| ● | public health concerns or emergencies, such as pandemic and other highly communicable diseases or viruses, outbreaks of which have from time to time occurred in various parts of the world in which we operate; |
| ● | managing operations in markets in which cash transactions are favored over credit or debit cards; |
| ● | political, social, and economic instability abroad; |
| ● | terrorist attacks, including data breaches and security concerns; |
| ● | breakdowns in infrastructure, utilities, and other services; |
| ● | exposure to a business culture in which improper business practices may be prevalent; |
| ● | compliance with various anti-bribery laws; and |
| ● | reduced or varied protection of intellectual property rights in some countries. |
While we believe that the present regulatory environment in our target markets is generally favorable, this could and may change over time. If the regulatory environment in our target markets becomes more unfavorable for car sharing businesses, this could have a negative impact on our operations in these markets and could adversely impact our ability to achieve sustainable profitability in these markets.
Political changes in the Government of India could delay or affect the further liberalization of the Indian economy and materially and adversely affect economic conditions in India, generally, and our business, in particular.
Our business could be significantly influenced by economic policies adopted by the government of India. Since 1991, successive governments have pursued policies of economic liberalization and financial sector reforms. The government has at various times announced its general intention to continue India’s current economic and financial liberalization and deregulation policies. However, protests against such policies, which have occurred in the past, could slow the pace of liberalization and deregulation. The rate of economic liberalization could change, and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investment in India could change as well. While we expect any new government to continue the liberalization of India’s economic and financial sectors and deregulation policies, there can be no assurance that such policies will be continued.
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The government of India has traditionally exercised and continues to exercise influence over many aspects of the economy. Our business may be affected by interest rates, changes in policy, taxation, social and civil unrest and other political, economic, or other developments in or affecting India.
A change in the government’s economic liberalization and deregulation policies could disrupt business and economic conditions in India generally, and specifically our business and operations, as substantially all of our business and operations are located in India. This could have a material adverse effect on our business, prospects, financial condition, and results of operations.
We may incur liability for the activities of Hosts or Guests, which could harm our reputation, increase our operating costs, and adversely affect our business, financial condition, and operating results.
We may be found to be subject to liability for the activities of Hosts and Guests on our platform. For example, we have in the past received, and expect to continue to receive, complaints from Hosts regarding damage to, or loss, theft, or impounding of, their vehicles and requests for damage reimbursement, and from Guests regarding quality or serviceability of the vehicles, other safety and security issues, and actual or perceived discrimination in connection with Hosts declining trips and requests for reimbursement of their trip fees, as well as actual or threatened legal action against us if no reimbursement or perceived incomplete reimbursement is made. In addition, some of our Hosts may list or have listed vehicles on our platform in violation of their lease or financing agreements or personal automobile insurance policies, or in violation of applicable legal restrictions on subleasing. Except for the examination of vehicle registration certificates at the time of the Host onboarding and listing process, we do not screen vehicles for compliance with safety standards or make efforts to determine whether they are legally registered to be driven on public roads, and it is possible that some vehicle registration certificates may be forged, or some of our Hosts may list or have listed vehicles on our platform that fail to meet basic safety or legal requirements for a vehicle. Our trust and safety checks and qualification procedures may not be capable of identifying all quality and safety issues, including safety recalls, and our systems are not designed to identify legal, quality, and safety issues that may occur after initial sign-up. Consequently, we could be and have been subject to liabilities incurred from local or state regulators and courts regarding the activities of Hosts and Guests on our platform or related legal, safety, and security issues.
If we are found to be subject to liability or claims of liability relating to the acts of Hosts or Guests, or for failure to pay fees, fines, or taxes owed by them, we may be subject to negative publicity or other reputational harm, even if we are not found to be subject to such liability, and this may cause us to incur additional expenses, which could harm our business, results of operations, and financial condition.
Host, Guest, or third-party actions that are criminal, violent, inappropriate, dangerous, or fraudulent may undermine the trust and safety or perception of trust and safety of our marketplace and our ability to attract and retain Hosts and Guests, which could materially and adversely affect our reputation, business, results of operations, and financial condition.
We have no control over or ability to predict the actions of our Hosts, Guests, and other third parties, such as additional passengers in, or drivers of vehicles booked on our platform, and we cannot guarantee the safety of our Hosts, Guests, and such third parties. From time to time, we may be subject to legal proceedings, including personal injury suits, claims, arbitrations, administrative proceedings, and government investigations or enforcement actions in the ordinary course of business. The actions of Hosts, Guests, and other third parties may result in fatalities, injuries, other bodily harm, assault, fraud, invasion of privacy, property damage, trespass, theft, including cases in which we are unable to recover the vehicle, discrimination, harassment, and libel, among other negative impacts, which could create potential legal or other substantial liabilities for us, Hosts, or Guests. For example, Hosts may incur and have incurred liability due to the unlawful actions of their Guests or other third parties Guests allow in the vehicle, such as traffic violations or other legal violations, and Guests may incur and have incurred liability due to the unlawful actions of their Hosts, such as vehicle or registration violations.
In addition, there have been rare instances where Guests were pulled over or detained by police because the vehicles, they were driving had been reported as stolen by the vehicle owner. Depending on the circumstances, Hosts or Guests may also attempt to assert liability on the part of Zoomcar for unlawful actions stemming from the use of vehicles available on our platform. Such liabilities could materially and adversely affect our reputation, business, results of operations, and financial condition. In addition, we do not, and may not in the future, undertake to independently verify the safety, suitability, quality, and compliance with our policies or standards of our Hosts’ vehicles. We have created policies and standards to respond to certain issues reported with listings, but certain bookings may pose heightened safety risks to individual users because the underlying issues had never been reported to us. We rely, at least in part, on Hosts and Guests to investigate and enforce many of our policies and standards and report any issues with listings to us, and we cannot guarantee that they will do this promptly or accurately.
Moreover, we cannot conclusively verify the identity of all Guests, nor do we verify or screen third parties who may be present during a trip using a vehicle booked through our platform. While we do some limited screening of Hosts, our trust and safety processes focus primarily on Guests to reduce the risk of vehicle theft and motor vehicle accidents. Our identity verification processes rely on, among other things, information provided by users at onboarding and booking, and our ability to validate that information and we do not require users to re-verify their identity following their successful completion of the initial verification process or require Guests to provide documentation or notification of any updates regarding their driving record or license status. We may not identify instances of identity fraud where a Guest books a vehicle under another person’s identity for criminal or other unlawful purposes. Furthermore, we do not conduct criminal background checks or any other screening processes on Guests and their invitees in a vehicle booked through our platform. Given this ambiguity or potential change, it is possible that we are not now, or may not be in the future, compliant with those laws. Further, the use of criminal background checks or credit checks in our marketplace may open us up to allegations of discrimination. Therefore, we may be subject to negative publicity and incur additional expenses, which could harm our business, results of operations, and financial condition.
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Our exposure to exchange rate fluctuations and the translation of local currency results into U.S. dollars could negatively impact our results of operations.
All of our business is transacted and/or denominated in foreign currencies, and fluctuations in currency exchange rates could have a significant impact on our results of operations, financial condition, and cash flows. Increased currency volatility, particularly in the Indian Rupee, could also positively or negatively impact our foreign-currency-denominated costs, assets, and liabilities. In addition, any devaluation of the Rupee relative to other foreign currencies could increase our operating expenses, adversely affecting the results of our operations. Any of these factors could adversely affect our financial condition and the results of our operations in the future.
The effective tax rates governing car rental and car subscription in India could change.
The tax environment continues to evolve in India on a routine basis and remains relatively fluid compared to other more mature markets. The indirect tax rates associated with the Goods and Services Tax (GST) have changed on multiple occasions since the GST’s introduction in 2017 and these tax rate shave further undergone changes most recently in September 2025. Any further increase in these indirect tax rates could result in a reduction in the Company’s operating cash flow, which could impair our future profitability.
We may have exposure to materially greater than anticipated tax liabilities.
The tax laws applicable to our business activities are subject to uncertainty and can be varied in the relevant jurisdictions. Like many other multinational companies, we are subject to tax in diverse jurisdictions and have structured our business to reduce our effective tax rate. The taxing authorities of the jurisdictions in which we operate have in the past, and may in the future, examine or challenge our methodologies for valuing developed technology, which could increase our worldwide effective tax rate and harm our financial position and operating results. Furthermore, our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, changes in the valuation of our deferred tax assets and liabilities, or changes in tax laws, regulations, or accounting principles. We are subject to regular review and audit by the tax authorities in the jurisdictions where we operate and currently face numerous income and other tax claims pending appeals before higher authorities in India. Any adverse outcome of such appeals or an adverse interpretation from the tax authorities on the tax compliances and tax rates applicable to our car sharing business could have an adverse effect on our financial position and operating results. In addition, the determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment by our management, and we have engaged in many transactions for which the ultimate tax determination remains uncertain. The ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made. Our tax positions or tax returns are subject to change, and therefore we cannot accurately predict whether we may incur material additional tax liabilities in the future, which could impact our financial position.
Our business is subject to extensive government regulation and oversight relating to the provision of payment and financial services.
The jurisdictions in which we operate and jurisdictions we may enter may have laws that govern payment and financial services activities. These laws govern, among other things, money transmission, prepaid access instruments, electronic funds transfers, anti-money laundering, counter-terrorist financing, banking, systemic integrity risk assessments, and cyber-security of payment processes. Our business operations, including our payments to Hosts and Guests, may not always comply with these financial laws and regulations. Regulators may determine that certain aspects of our business are subject to these laws and could require us to obtain licenses to continue to operate in India. We have evaluated and will continue to critically evaluate our options for seeking applicable licenses and approvals in the jurisdictions where we operate to optimize our payment solutions and support the future growth of our business. Laws related to money transmission and online payments are evolving, and changes in such laws could affect our ability to provide payment processing on our platform in the same form and on the same terms as we have historically, or at all.
Historical or future non-compliance with these laws or regulations could result in significant criminal and civil lawsuits, penalties, forfeiture of significant assets, or other enforcement actions. Costs associated with fines and enforcement actions, as well as reputational harm, changes in compliance requirements, or limits on our ability to expand our product offerings, could harm our business.
Further, our payment system may be susceptible to illegal and improper uses, including money laundering, terrorist financing, fraudulent transactions, and payments to sanctioned parties. We have invested and will continue to invest substantial resources to comply with applicable anti-money laundering and sanctions laws and conduct appropriate risk assessments and implement appropriate controls. Government authorities may seek to bring legal action against us if our payment system is used for improper or illegal purposes or if our enterprise risk management or controls are not adequately assessed, updated, or implemented appropriately, and any such action could result in financial or reputational harm to our business.
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Our reported financial results may be adversely affected by changes in accounting principles.
The accounting for our business is complicated, particularly in the area of revenue recognition, and is subject to change based on the evolution of our business model, interpretations of relevant accounting principles, enforcement of existing or new regulations, and changes in SEC or other agency policies, rules, regulations, and interpretations, of accounting regulations. Changes to our business model and accounting methods could result in changes to our financial statements, including changes in revenue and expenses in any period, or in certain categories of revenue and expenses moving to different periods, may result in materially different financial results, and may require that we change how we process, analyze, and report financial information and our financial reporting controls.
We are subject to privacy laws and regulations, and compliance with these laws and regulations could impose significant compliance burdens.
The regulatory framework for privacy issues worldwide is currently in flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use, storage, transmission, and security of personal information by companies operating over the internet have recently come under increased public scrutiny. The European Union’s privacy and data security regulation, the General Data Protection Regulation (“GDPR”), that went into effect in May 2018, requires companies to implement and remain compliant with regulations regarding the handling of personal data, including its use, protection, and the ability of persons whose data is stored to correct or delete such data about themselves. Other countries in Asia, Europe and Latin America have passed or are considering similar privacy regulations, resulting in additional compliance burdens and uncertainty as to how some of these laws will be interpreted.
We receive, collect, and store a large volume of personally identifiable data by processing car sharing transactions on our platform. This data is increasingly subject to legislation and regulations in numerous jurisdictions around the world.
For example, the Indian Information Technology Act, 2000, as amended, would subject us to civil liability to compensate for wrongful loss or gain arising from any negligence by us in implementing and maintaining reasonable security practices and procedures with respect to sensitive personal data or information that we possess in our computer systems, networks, databases, and software. India has also implemented privacy laws, including the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, which impose limitations and restrictions on the collection, use and disclosure of personal information. The Digital Personal Data Protection Act, 2023 (“DPDPA”) has been introduced in August of 2023 which has significant impact on the current regulatory environment with respect to the lawful use of digital personal data, cross border data transfers and additional compliances that may be invoked for organizations collecting and/or processing personal data.
Further, in India, the draft of Digital Personal Data Protection Rules (“DPDP Rules”) which aims to operationalize the Digital DPDPA, in line with India’s commitment to create a robust framework for protecting digital personal data, has been published in January 2025 for public comments. While the DPDP Rules are yet to be finalized and formally adopted, the entire framework for data protection legislation is fairly new in India and going through the phases of implementation right now which may add to cost of compliances and operations for us and may affect us in ways that we are currently unable to predict.
Any liability we may incur for violation of such laws and regulations and related costs of compliance and other burdens may adversely affect our business and profitability. We could be adversely affected if legislation or regulations are expanded to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, results of operations or financial condition.
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Failure to comply with labor laws and regulations may cause us to incur additional costs, which may affect our business, financial conditions, and results of operations.
Our business operations are governed by various labor laws, regulations, and government policies in multiple jurisdictions. The requirements for labor law compliance may change from time to time in each jurisdiction. We may be unable to comply with all these requirements in time, or at all, or we may need to incur substantial costs to be compliant, which may adversely affect our business operations and financial condition.
In India, provisions were released between 2019 and 2021 relating to the contribution of provident fund, employee state insurance, and professional taxes by employers for the certain employees. Any delay or failure to make such contribution may result in penalties, interests, notices, or other administrative actions by the relevant local authorities in India. As of September 30, 2025, Zoomcar India has incurred a penalty of less than $ 38,291/- (based on the foreign exchange rates as of September 30, 2025) for failure to make timely contribution, which Zoomcar India plans to remit, with associated interest due, as instructed by the relevant local authority. This outstanding penalty and interest will continue to accrue unless paid in full, which could adversely affect our business, financial conditions and results of operations.
Uncertain global macro-economic and political conditions could materially and adversely affect our results of operations and financial condition.
Our results of operations could be materially affected by economic and political conditions in the United States and internationally, including inflation, deflation, interest rates, availability of capital, war, terrorism, aging infrastructure, pandemics, energy and commodity prices, trade laws, election cycles and the effects of governmental initiatives to manage economic conditions. Current or potential business and consumer members may delay or decrease spending on our products and services sold through our platform as their business and/or budgets are impacted by economic conditions. The inability of current and potential business and consumer members to pay us for products and services sold through our platform may adversely affect our earnings and cash flow.
Natural disasters, including and not limited to unusual weather conditions, epidemic outbreaks, terrorist acts and political events could disrupt our business schedule.
The occurrence of one or more natural disasters, including and not limited to tornadoes, hurricanes, fires, floods and earthquakes, unusual weather conditions, pandemics and endemic outbreaks, terrorist attacks or disruptive political events in certain regions where our facilities are located, or where our third-party contractors’ and suppliers’ facilities are located, could adversely affect our business. Natural disasters including tornados, hurricanes, floods, and earthquakes may damage our facilities or those of our suppliers, which could have a material adverse effect on our business, financial condition, and results of operations. Terrorist attacks, actual or threatened acts of war or the escalation of current hostilities, or any other military or trade disruptions impacting our domestic or foreign suppliers of components of our products, may impact our operations by, among other things, causing supply chain disruptions and increases in commodity prices, which could adversely affect our raw materials or transportation costs. These events also could cause or act to prolong an economic recession in the United States or abroad. In addition, the disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans and, more generally, any of these events could cause consumer/ member confidence and spending to decrease, which could adversely impact our operations.
We may be unable to successfully grow our business if we fail to compete effectively with others to attract and retain our executive officers and other key management and technical personnel.
We believe our future success depends upon our ability to attract and retain highly competent personnel. Our employees are at-will and not subject to employment contracts. We could potentially lose the services of any of our senior management personnel at any time due to a variety of factors that could include, without limitation, death, incapacity, personal issues, retirement, resignation or competing employers. Our ability to execute current plans could be adversely affected by such a loss. We may fail to attract and retain qualified technical, sales, marketing and managerial personnel required to continue to operate our business successfully. Personnel with the expertise necessary for our business are scarce and competition for personnel with proper skills is intense.
In addition, new hires frequently require extensive training before they achieve desired levels of productivity. Additionally, attrition in personnel can result from, among other things, changes related to acquisitions, retirement, and disability. We may not be able to retain existing key technical, sales, marketing and managerial employees or be successful in attracting, developing, or retaining other highly qualified technical, sales, marketing, and managerial personnel, particularly at such times in the future as we may need to fill a key position. If we are unable to continue to develop and retain existing executive officers or other key employees or are unsuccessful in attracting new highly qualified employees, our financial condition, cash flows, and results of operations could be materially and adversely affected.
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Risks Related to Our Operations as a Public Company
The requirements of being a public company may strain our resources, divert our management’s attention, and affect our ability to attract and retain qualified independent board members.
As a public company, we are subject to the reporting and corporate governance requirements of the Exchange Act, the listing requirements of listing requirements of OTC Markets Group and other applicable securities rules and regulations, including the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming, or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company” as defined in the JOBS Act. Among other things, the Exchange Act requires that we file annual, quarterly, and current reports with respect to our business and results of operations and maintain effective disclosure controls and procedures and internal control over financial reporting. In order to improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, the management’s attention may be diverted from other business concerns, which could harm our business, financial condition, results of operations and prospects. Although we have already hired additional personnel to help comply with these requirements, we may need to further expand our legal and finance departments in the future, which will increase our costs and expenses.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expense and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings against us, and our business and prospects may be harmed. As a result of disclosure of information in the filings required of a public company and in this quarterly report, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business, financial condition, results of operations and prospects could be materially harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and materially harm our business, financial condition, results of operations and prospects.
We may have increasing difficulty attracting and retaining qualified outside independent board members.
The directors and management of publicly traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits and shareholder claims, as well as governmental and creditor claims that may be made against them in connection with their positions with publicly held companies. Outside directors are becoming increasingly concerned with the availability of directors’ and officers’ liability insurance to pay on a timely basis the costs incurred in defending shareholder claims. Directors’ and officers’ liability insurance is expensive and difficult to obtain. The SEC and the OTC Markets including the OTCQB Rules also impose higher independence standards and certain special requirements on directors of public companies. Accordingly, it may become increasingly difficult to attract and retain qualified outside directors to serve on our Board.
Stock trading volatility could impact our ability to recruit and retain employees.
Volatility or lack of appreciation in our stock price may also affect our ability to attract and retain our key employees. Employees may be more likely to leave us if the shares they own or the shares underlying their vested equity have not significantly appreciated in value relative to the original purchase price of the shares or the exercise price of the options, or conversely, if the exercise price of the options that they hold are significantly above the market price of our Common Stock. If we are unable to retain our employees, or if we need to increase our compensation expenses to retain our employees, our business, operating results, and financial condition could be adversely affected.
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Members of our management team have limited or no prior experience managing a public company.
Except a few, most of the members of our senior management team have no experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company, which will subject us to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts, investors, and regulators. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could harm our business, results of operations, and financial condition.
We may be exposed to risk if we cannot enhance, maintain, and adhere to our internal controls and procedures.
As a public company trading on OTCQB, we have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that will require us to anticipate and react to changes in our business accounting, auditing and regulatory requirements and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company, and we are still early in the process of generating a mature system of internal controls and integration across business systems. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our financial statements, and harm our operating results.
Matters impacting our internal controls may cause us to be unable to report our financial information in an accurate manner or on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of OTCQB Rules. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements could also suffer if we or our independent registered public accounting firm continue to report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline in the market price of our Common Stock.
As a public company, we have incurred and expect to continue to incur increased expenses associated with the costs of being a public company.
We have and expect to continue to face a significant increase in insurance, legal, auditing, accounting, administrative and other costs, and expenses as a public company that we did not currently incur as a private company. The Sarbanes-Oxley Act, including the requirements of Section 404 of that Act, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Act and the rules and regulations promulgated and to be promulgated thereunder, the Public Company Accounting Oversight Board (“PCAOB”), the SEC and OTCQB, impose additional reporting and other obligations on public companies. Compliance with public company requirements has and will continue to increase our costs and make certain activities more time-consuming. A number of those requirements require us to carry out activities that we have not done previously. For example, we recently created new board committees and adopted new internal controls and disclosure controls and procedures. In addition, additional expenses associated with SEC reporting requirements have and will continue to be incurred. Furthermore, if any issues in complying with those requirements are identified ( for example, if our independent registered accounting firm identifies a material weakness or significant deficiency in the information technology general controls for information systems that are relevant to the preparation of the Company’s consolidated financial statements), we could incur additional costs to remediate those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it. Being a public company has and may in the future make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance. We may ultimately be forced to accept reduced policy limits and coverage with increased self-retention risk or incur substantially higher costs to obtain the same or similar coverage in the future. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Common Stock, fines, sanctions and other regulatory action and potentially civil litigation.
The additional reporting and other obligations imposed by various rules and regulations applicable to public companies has and is expected to continue to increase legal and financial compliance costs and the costs of related legal, auditing, accounting, and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by shareholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.
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Our current indebtedness, and to the extent we incur indebtedness in the future, our future indebtedness could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry and our ability to pay our debts and could divert our cash flow from operations for debt payments.
We are in default of a majority of our indebtedness of $ 24.93 million as of September 30, 2025 as more fully described under the Unaudited Condensed Consolidated Financial Statements, which has had and will continue to have an adverse effect on our financial condition, our ability to raise additional capital to fund our operations, and our ability to operate our business. Further, in the future, we may continue to incur a material amount of indebtedness. Our level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay the principal of, interest on, or other amounts due with respect to our indebtedness. Our leverage and debt service obligations could adversely impact our business, including by:
| ● | impairing our ability to generate cash sufficient to pay interest or principal, including periodic principal payments; |
| ● | increasing our vulnerability to general adverse economic and industry conditions; |
| ● | requiring the dedication of a portion of our cash flow from operations to service our debt, thereby reducing the amount of our cash flow available for other purposes, including capital expenditures, dividends to stockholders or to pursue future business opportunities; |
| ● | requiring us to sell debt or equity securities, possibly on unfavorable terms, to meet payment obligations; |
| ● | limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete; and |
| ● | placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources. |
The Company may be subject to securities litigation, which is expensive and could divert management’s attention.
Following the Business Combination, the per share price of the Common Stock has been and may continue to be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities litigation, including class action litigation. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which could have a material adverse effect on our business, financial condition, and results of operations. Any adverse determination in litigation could also subject the Company to significant liabilities.
Zoomcar has limited operating history as a publicly traded company, and its historical financial information is not necessarily representative of the results we would have achieved as a publicly traded company and may not be a reliable indicator of its future results.
The historical financial information included in this Quarterly Report on Form 10-Q from Zoomcar’s operation as a private company prior to the Business Combination does not necessarily reflect the results of operations and financial position we would have achieved as a publicly traded company during the periods presented, or those that we will achieve in the future. This is primarily because of the following factors:
| ● | Prior to the Business Combination, we operated as a private company. Our historical financial information reflects allocations of corporate expenses as a private company. These allocations may not reflect the costs we will incur for similar services in the future as a publicly traded company. |
| ● | Our historical financial information does not reflect changes that we expect to experience in the future as a result of becoming a publicly traded company, including changes in the financing, insurance, cash management, operations, cost structure and personnel needs of our business. As a publicly traded entity, we may be unable to purchase goods, services and technologies, such as insurance and health care benefits and computer software licenses, or access capital markets, on terms as favorable to us as those we obtained as a private company prior to the Business Combination, and our results of operations may be adversely affected. |
We also face additional costs and demands on management’s time associated with being a publicly traded company, including costs and demands related to corporate governance, investor and public relations and public reporting. Stockholder activism, the current political and social environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which will likely result in additional compliance costs and could impact the manner in which Zoomcar operates its business in ways we cannot currently anticipate. For additional information about our past financial performance, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Unaudited Condensed Consolidated Financial Statements and the Notes thereto included elsewhere in this Quarterly Report on Form 10-Q.
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Risks Related to Ownership of Our Common Stock
Future sales of our Common Stock could cause the market price for our Common Stock to decline.
We cannot predict the effect, if any, that market sales of shares of our Common Stock or the availability of shares of our Common Stock, including upon exercise or conversion of any of our outstanding securities, for sale will have on the market price of our Common Stock prevailing from time to time. Sales of substantial amount of shares of our Common Stock on the public market, or the perception that those sales will occur, including sales pursuant to this quarterly report, could cause the market price of our Common Stock to decline or be depressed.
As described elsewhere herein, we expect to issue additional securities in the future to raise capital to continue our operations. Additionally, we may issue our securities if we need to raise capital in connection with capital expenditure, working capital requirement or acquisition. The number of shares of our Common Stock issued in connection with a capital expenditure, working capital requirement or acquisition could constitute a material portion of our then-outstanding shares of Common Stock. Any perceived excess in the supply of our shares in the market could negatively impact our share price and any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.
The market price and trading volume of our Common Stock may continue to be highly volatile, which could lead to a loss of all or part of a stockholder’s investment.
The market price of our Common Stock has fluctuated widely since the closing of our Business Combination. During the period from January 1, 2024 to November , 2025, the trading price of our Common Stock has fluctuated from an intra-day high of $15,220 on January 12, 2024, to an intra-day low of $0.18 on November 6,, 2025.
The market price of our Common Stock is affected by a variety of factors, including but not limited to:
| ● | our ability to execute our anticipated business plans and strategy; |
| ● | actual or anticipated fluctuations in our quarterly or annual operating results; |
| ● | our ability to obtain additional capital which will be necessary to continue our business and operations; |
| ● | changes in financial or operational estimates or projections; |
| ● | changes in the economic performance or market valuations of companies similar to ours; |
| ● | the impact of pandemics, inflation, war, other hostilities, and other disruptive events on our business or that of our customers, partners, and supply chain or on the global economy; and |
In addition, the trading price and trading volume of our Common Stock has very recently and at certain other times in the past exhibited, and may continue to exhibit, extreme volatility, including within a single trading day. Such volatility could cause purchasers of our Common Stock to incur substantial losses.. With respect to certain instances of trading volatility, we are not aware of any material changes in our financial condition or results of operations that would explain such price volatility or trading volume, which we believe reflect market and trading dynamics unrelated to our operating business or prospects and outside of our control. We are thus unable to predict when such instances of trading volatility will occur or how long such dynamics may last. Under these circumstances, we would caution you against investing in our Common Stock unless you are prepared to incur the risk of incurring substantial losses.
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A proportion of our Common Stock may be traded by short sellers, which may put pressure on the supply and demand for our Common Stock, creating further price volatility. In particular, a possible “short squeeze” due to a sudden increase in demand of our Common Stock that largely exceeds supply may lead to sudden extreme price volatility in our Common Stock. Investors may purchase our Common Stock to hedge existing exposure in our Common Stock or to speculate on the price of our Common Stock. Speculation on the price of our Common Stock may involve long and short exposures. To the extent aggregate short exposure exceeds the number of shares of Common Stock available for purchase in the open market, investors with short exposure may have to pay a premium to repurchase our Common Stock for delivery to lenders of our Common Stock. Those repurchases may in turn dramatically increase the price of our Common Stock until investors with short exposure are able to purchase additional Common Stock to cover their short position. This is often referred to as a “short squeeze.” Following such a short squeeze, once investors purchase the shares necessary to cover their short position, the price of our Common Stock may rapidly decline. A short squeeze could lead to volatile price movements in our shares that are not directly correlated to the performance or prospects of our company and could cause purchasers of our common shares to incur substantial losses.
Further, shareholders may institute securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources, and the attention of management could be diverted from our business.
Our issuance of additional capital stock in connection with financing, acquisitions, investments, the Incentive Plan or otherwise will dilute all other stockholders.
We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors and consultants under the Incentive Plan. We may also raise capital through equity financing in the future. As part of our business strategy, we may acquire or make investments in complementary companies, products or technologies and issue equity securities to pay for any such acquisition or investment. Any such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of our Common Stock to decline.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.
The trading market for our securities will be influenced by the research and reports that industry or securities analysts may publish about us, our business, markets, revenue streams, and competitors. Securities and industry analysts do not currently, and may never, publish research on us. If no securities or industry analysts commence coverage of us, our share price and trading volume would likely be negatively impacted. If any of the analysts who may cover us adversely change their recommendation regarding our shares of Common Stock or provide relatively more favorable recommendations with respect to competitors, the price of our shares of Common Stock would likely decline. If any analyst who may cover us were to cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.
We do not intend to pay cash dividends for the foreseeable future.
We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements, and future agreements and financing instruments, business prospects and such other factors as our Board deems relevant.
Because there are no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on your investment unless you sell your Common Stock at a price greater than what you paid for it.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount, and payment of any future dividends on shares of our Common Stock will be at the sole discretion of the Board. The Board may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, implications of the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as the Board may deem relevant. As a result, you may not receive any return on an investment in the Common Stock unless you sell your Common Stock for a price greater than that which you paid for it.
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Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for the Common Stock to decline.
The sale of shares of our Common Stock on the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.
As of November 12, 2025 we have a total of 6,902,727 shares of Common Stock outstanding (i) without giving effect to any awards that may be issued under the Incentive Plan and (ii) assuming no exercise of the outstanding options and warrants. All shares currently held by public stockholders and all of the shares issued in the Business Combination to former Zoomcar Stockholders are freely tradable without registration under the Securities Act (except for the Common Stock that are the subject of resale registration statement pending effectiveness or filing ), and without restriction by persons other than our “affiliates” (as defined under Rule 144 under the Securities Act, (“Rule 144”)), including our directors, executive officers and other affiliates.
We filed resale registration statements on December 12, 2024, to register for resale a total of shares of Common Stock 660,320 (13,206,386 shares of Common Stock prior to giving effect to the Second Reverse Split) including shares of Common Stock issuable upon exercise of outstanding warrants.
We also filed resale registration statements March 4, 2025, to register for resale a total of 6,682,720 shares of Common Stock (133,654,397 shares of Common Stock prior to giving effect to the Second Reverse Split) including shares of Common Stock issuable upon exercise of outstanding warrants.
All of the remaining Registrable Securities in the above mentioned offerings were included in those registration statements. These registration statements are still pending and a large number of such Registrable Securities continue to be unregistered, but upon effectiveness of that registration statement, it is likely that many of the securities registered for resale thereunder will be sold.
As of March 31, 2025, the Company entered into a securities purchase agreement, substantially in the same form as the December 2024 SPA and the January 2025 SPA with certain additional accredited investors in connection with the third closing of the Offering (the “Third Closing”). The Company did not receive any cash proceeds in the Third Closing. The securities were issued to the investors either (i) as consideration for waiving certain rights that such investors may have had in connection with a most favored nations provision included in the transaction documents for a prior financing of Zoomcar, Inc. or (ii) to settle outstanding amounts owed by the Company to its Placement Agent and the Legal Counsels (Aegis Settlement and Law Firm Settlement described below). Pursuant to the terms and conditions of the Securities Purchase Agreement, the Company issued to such investors an aggregate of $15,639,099 of securities consisting of 501,318 shares of common stock of the Company, par value $0.0001 per share (the Common Stock). The Company along with the Common Stock issued (i) Series A Warrants to purchase up to an aggregate of 6,706,192 shares of Common Stock at an exercise price of $6.24 per share, which takes into account a “share combination event” adjustment effective following the issuance of such warrants as a result of the Reverse Split (the “Series A Warrants”) and (ii) Series B Warrants to purchase initially no shares of Common Stock and then up to a maximum of 2,004,955 shares of Common Stock subject to certain adjustments, at an initial exercise price of $0.002.
The Company had filed a registration statement on Form S-1 on May 05, 2025, which did not take effect for resale of the securities that were issued in the Third Closing.
Thereafter, on June 6, 2025, the Company issued a settlement letter (the “Settlement Letter”) to each of the investors from the First and the Second Closings (the “Settlement Investors”), pursuant to which the Settlement Investors agreed to the settlement of liquidated damages arising from Section 2.4 of the Registration Rights Agreements with the Investors, entered into on December 23, 2024 and January 31, 2025, respectively (“RRAs”). Under the provisions of the Settlement Letter, the Company agreed to issue an aggregate of 1,950,600 pre-funded warrants with an aggregate value of US$3,023,400 to the Settlement Investors (the “Settlement Warrants”), with each Settlement Warrant having an exercise price of $0.0001 per share of Common Stock, in consideration for the full payment of liquidated damages owed to each Settlement Investor under Section 2.4 of the applicable RRA, and each Settlement Investor’s release of the Company from any and all claims thereunder including, without limitation any additional liquidated damages. The liquidated Damages were calculated till such period that the Investor first became eligible to freely resell the underlying securities under Rule 144 of the Securities Act of 1933. The valuation of the Settlement Warrants was calculated based on the volume-weighted average price of the Company’s common stock over the five (5) trading days immediately preceding June 6, 2025.
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The Settlement Warrants may be exercised at any time until they are exercised, in full, at an exercise price of $0.0001 per share of Common Stock, and may also be exercised on a cashless exercise basis, in lieu of any cash payment, in accordance with the formula provided in the Settlement Warrants.
Once the restriction under Rule 144 of Securities Act of 1933 are removed from the above mentioned Settlement Warrants and common stock is issued pursuant to that, it is most likely that most of the securities will be sold.
In addition, the shares of Common Stock reserved for future issuance under the Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to any applicable vesting requirements, lock-up agreements and other restrictions imposed by law. As of November 12, 2025, a total of 486,754 shares of Common Stock have been reserved for future issuance under the Incentive Plan.
On February 11, 2025, the Company has filed Form S-8 Registration Statement with the U.S. Securities and Exchange Commission (SEC), to register an aggregate of 392,189 shares of Common Stock, which are reserved for issuance under Zoomcar Holdings, Inc. 2023 Equity Incentive Plan. This Registration Statement is being filed in order to register the Registrant’s Common Stock that may be offered or sold to participants under the Plan, either directly or upon exercise of options or other share-based awards granted under the Plan.
Thereafter, the company filed another S-8 for the registration of an additional 5,008,017 shares of our Common Stock, consisting of (i) 369,311 shares of our Common Stock that our shareholders approved at a special meeting of stockholders held on February 18, 2025 and (ii) 4,638,706 shares of our Common Stock that our board of directors (the “Board”) approved on July 7, 2025.
The Company, thereafter on August 04, 2025, issued a total of 4,525,000 RSUs to its employees and directors in accordance with the Incentive Plan and adjusted a cancellation of 2077 RSUs owing to employee exits till August 11, 2025.
This Registration Statement also registered the 1,000,000 shares of Common Stock issuable to Deepankar Tiwari, to induce the employee to accept employment as the Company’s Chief Executive Officer pursuant to a consulting agreement between the Company and Mr. Tiwari dated May 9, 2025. The inducement award was approved by the Board of Directors. The inducement award was granted outside of the Incentive Plan. Of the issued 1,000,000 shares to Deepankar Tiwari, 500,000 have vested as of date of filing of this Quarterly Report on Form 10-Q.
Accordingly, shares registered under such a registration statement will be available for sale in the open market upon the effectiveness of the registration statement.
In the future, we may also issue our securities to raise capital or in connection with investments or acquisitions. We may also issue additional securities upon adjustments included in our existing securities. For example, on June 18, 2024, we closed a private placement transaction of notes and warrants for $3 million of gross proceeds, on November 7, 2024, we closed a private placement transaction of shares and warrants for $9.15 million of gross proceeds, on December 24, 2024, we consummated the First Closing of that December 2024 offering in which we issued shares and warrants for $5,484,843 of gross proceeds, and on and January 31, 2025, we consummated the Second Closing of the December 2024 Offering in which we issued shares and warrants for $1.44 million. On March 31, 2025, we consummated the Third Closing of the December 2024 Offering wherein the Company issued securities for an aggregate of $15,639,099 without receiving any cash or cash equivalents as the securities were issued to investors either (i) as consideration for waiving certain rights that such investors may have had in connection with a most favored nations provision included in the transaction documents for a prior financing of Zoomcar, Inc. or (ii) to settle outstanding amounts owed by the Company to its Placement Agent and the Legal Counsels.
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On June 24, 2025, the Company has issued a bridge note to certain investors (1800 Diagonal Lending LLC, and Boot Capital LLC) totaling $402,000 at a discount of $42,000. The note is repayable in five monthly installments beginning November 30, 2025, and maturing on March 31, 2026, with interest accruing at 12% per annum on the outstanding principal. The Company received net proceeds of $350,000 after adjusting issuance cost of $10,000. In the event of an uncured default under either of the Bridge notes, the holder has the right to elect to convert the outstanding amount (includes principal, accrued interest, default interest, and other fees as applicable) into the Company’s Common stock at a conversion price equal to 75% of the lowest trading price of the Company’s Common stock during the fifteen trading days immediately prior to the applicable conversion date.
On July 31, 2025 , the Company further issued to certain investors (Boot and DLL) convertible Bridge notes for a total principal amount of $206,225 with an initial issue discount of $23,725. The July Bridge Notes include scheduled monthly installment repayments and interest payments starting August 30, 2025 and have a maturity date of May 31, 2025, with interest at 12% per annum. The net proceeds disbursed to the Company were $175,000 after deduction of legal and due diligence fees of $7,500. Hence, the total debt issuance costs amounts to $7,500. In the event of an uncured default under either of the July Bridge Notes, the July Note Holders have the right to elect to convert the outstanding amount (includes principal, accrued interest, default interest, and other fees as applicable) into the Company’s Common stock at a conversion price equal to 75% of the lowest trading price of the Company’s Common stock during the fifteen trading days immediately prior to the applicable conversion date.
On August 19, the Company issued a note to Labrys totaling a principal amount of $180,000 at a discount of $18,000. The Labrys Note is repayable in 12 months maturing on August 19, 2026 with interest accruing at 12 % per annum on the outstanding principal. The Company received net proceeds of $158,500 after adjusting issuance cost of $3,500. While the Labrys Note is convertible 180 days from issuance of the Labrys Note at the option of Labrys, Labrys may in the event of an uncured default under the Labrys Note, elect the right to convert the outstanding amount (includes principal, accrued interest, default interest, and other fees as applicable) into the Company’s Common stock at a conversion price equal to 75% of the lowest closing bid price of the Company’s Common stock during the fifteen trading days immediately prior to the applicable conversion date.
On August 24, 2025, the Company issued to AES notes with an aggregate principal amount $112,500split into $75,000and $37,500 respectively ( the AES Notes). The note amounting $75,000 is the “Primary Note” and the subsequent note of $37,500 is the “Secondary Note”. The AES Notes are repayable in 12 months from their respective closing dates with interest accruing at 8% per annum on the outstanding principal. As of date of filing of this 10-Q, the Company received net proceeds of $71,000 after adjusting issuance cost of $4,000from the issuance and closing of the Primary Notes. Apart from the events of default under the AES Notes that maty trigger conversion, the AES Notes are convertible at the option of the holder at any time for the then outstanding amounts (including principal, accrued interest, default interest, and other fees as applicable) into the Company’s Common stock at a conversion price equal to 72.5% of the average of the three lowest trading prices of the Common Stock as reported on the OTC Markets on which the Company’s shares are then traded or any exchange upon which the Common Stock may be traded in the future, for the seven prior trading days including the day upon which a Notice of Conversion is received by the Company.
On August 24, 2025, the Company closed a Securities Purchase Agreement (“CFI SPA”) with CFI CAPITAL LLC (“CFI”) in connection with purchase of convertible redeemable notes. Pursuant to the CFI SPA, CFI purchased a convertible for a principal amount of $150,000 at an original issue discount of $15,000. The note is repayable in 12 months maturing on August 24, 2026 with interest accruing at 6 % per annum on the outstanding principal. The Company received net proceeds of $130,000 after adjusting issuance cost of $5000. This note is subject to a default penalty amounting to increase in the principal amount by 50% and includes customary events of default and covenants.
The amount of shares of Common Stock issued or issuable upon exercise or conversion of securities issued in connection with a capital raise or an investment or acquisition or any such bridge notes could constitute a material portion of the then-outstanding shares of the Common Stock. Any issuance of additional securities in connection with capital raising activities, investments or acquisitions may result in additional dilution to our stockholders.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no other sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company except as set forth below:
On July 31, 2025, the Company issued a $56,500 aggregate principal amount of unsecured bridge promissory note (the “Boot Note”) to Boot Capital LLC (“Boot”), an accredited investor, for cash proceeds of $50,000 after accounting for an original issue discount of $6,500. The Boot Note is convertible into shares of the Company’s common stock upon default under the terms of the note and is subject to customary covenants and events of default and is convertible at a variable per share price equivalent to 75% of Market Price based on the lowest Trading Price for the common stock during the ten (10) trading day period ending on the latest complete Trading Day prior to the Conversion Date. The issuance was made in reliance on Section 4(a)(2) and/or Rule 506(b) of the Securities Act of 1933, as amended. No underwriters or brokers were involved in the transaction. The Company intends to use the proceeds for working capital in its day-day to operations.
On July 31, 2025, the Company issued a $149,725 aggregate principal amount of unsecured bridge promissory note (the “DLL Note”) to 1800 Diagonal Lending LLC, (“DLL”), an accredited investor, for cash proceeds of $132,500 after accounting for an original issue discount of $ $17,225. The Boot Note is convertible into shares of the Company’s common stock upon default under the terms of the note and is subject to customary covenants and events of default and is convertible at a variable per share price equivalent to 75% of Market Price based on the lowest Trading Price for the common stock during the ten (10) trading day period ending on the latest complete Trading Day prior to the Conversion Date. The issuance was made in reliance on Section 4(a)(2) and/or Rule 506(b) of the Securities Act of 1933, as amended. No underwriters or brokers were involved in the transaction. The Company intends to use the proceeds for working capital in its day-day to operations.
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On August 19, 2025, the Company issued $180,000 aggregate principal amount of unsecured convertible promissory note (the “ Labrys Note”) to Labrys Fund II, L.P(“Labrys”) an accredited investor for cash proceeds of $158,500. The Labrys Note matures on August 19, 2026, bears interest at 12% per annum and is convertible into shares of our common stock upon default in repayment of the principal amount and other specified default triggers pertaining to bankruptcy, failure to convert shares etc. at a variable per share conversion price equivalent to 75% of the lowest closing bid price of the common stock during fifteen (15) trading days immediately preceding date of the Conversion Notice per share, subject to certain anti-dilution and beneficial ownership limitation terms. The issuance was made in reliance on Section 4(a)(2) and/or Rule 506(b). No underwriters or brokers were involved. The Company intends to use the proceeds for working capital in its day-day to operations.
On August 24, 2025, the Company issued $75,000 aggregate principal amount of unsecured convertible promissory notes (the “AES Note”) to AES Capital Management, LLC (“AES”) an accredited investor for cash proceeds of $71,000. The AES Note matures on August 24, 2026, bears interest at 8% per annum and is convertible into shares of our common stock upon default and other specified triggers pertaining to insolvency, delisting, certain money judgements, failure to convert shares etc. at a variable per share conversion price equivalent to 72.5% of the average of the three lowest trading prices of the common stock as reported on the OTC Markets or any exchange upon which the common stock may be traded in the future, for the seven prior trading days including the day upon which a Notice of Conversion is received by the Company and is subject to a beneficial ownership limitation. The issuance was made in reliance on Section 4(a)(2) and/or Rule 506(b). No underwriters or brokers were involved. The Company intends to use the proceeds for working capital in its day-day to operations.
On August 24, 2025, the Company issued $150,000 aggregate principal amount of unsecured convertible promissory notes (the “CFI Note”) to CFI CAPITAL LLC (“CFI”) an accredited investor for cash proceeds of $130,000. The CFI Note matures on August 24, 2026; bears interest at 6% and is convertible into shares of our common stock upon default and other specified triggers pertaining to insolvency, delisting, certain money judgements, failure to convert shares etc. at a variable per share conversion price equivalent to 72% of the lowest trading price of the common stock as reported on the OTC Markets on then traded or any exchange upon which the common stock may be traded in the future for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company per share, subject to beneficial ownership limitation. The issuance was made in reliance on Section 4(a)(2) and/or Rule 506(b). No underwriters or brokers were involved. The Company intends to use the proceeds for working capital in its day-day to operations.
Item 3. Defaults Upon Senior Securities
There were no defaults upon senior securities during the period covered by this Report.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the quarter ended September 30, 2025,
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| No. | Description of Exhibit | |
| 3.1 | Amended and Restated Certificate of Incorporation of Zoomcar Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on January 4, 2024). | |
| 3.2 | Amended and Restated Bylaws of Zoomcar Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on January 4, 2024). | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
| ** | Furnished. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ZOOMCAR HOLDINGS, INC. | ||
| Date: November 14, 2025 | By: | /s/ Deepankar Tiwari |
| Name: | Deepankar Tiwari | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: November 14, 2025 | By: | /s/ Sachin Gupta |
| Name: | Sachin Gupta | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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FAQ
What were Zoomcar (ZCAR) revenues and net loss for the quarter ended September 30, 2025?
How much cash did Zoomcar (ZCAR) have at September 30, 2025?
Did Zoomcar (ZCAR) raise capital during this period?
What is Zoomcar’s (ZCAR) working capital position?
What is Zoomcar’s (ZCAR) equity position?
How many Zoomcar (ZCAR) shares were outstanding?
Did Zoomcar (ZCAR) flag going concern risks?
